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How can my equity be lower than my cash in bank when i have no liabilities?

RahatK96RahatK96 Member Posts: 2

I have made exactly what is in Cash and Bank, but in my profit and loss and balance sheet it is telling me my net profit is lower than what is in my bank, but i have nothing outstanding and no liabilities, debt or anything.

I don't understand this, is this a bug?


,

in Accounting Technical Support

Comments

  • KimptonKimpton Member Posts: 78 ✭✭

    This is a Balance Sheet and it is not balanced. It's out by 80.00. Perhaps you have an income gain of 80.00 on your Income Statement - that amount shows on your "current period income (loss)" account.
    Not much to go one here.

  • RahatK96RahatK96 Member Posts: 2

    @Kimpton said:
    This is a Balance Sheet and it is not balanced. It's out by 80.00. Perhaps you have an income gain of 80.00 on your Income Statement - that amount shows on your "current period income (loss)" account.
    Not much to go one here.

    @Kimpton said:
    This is a Balance Sheet and it is not balanced. It's out by 80.00. Perhaps you have an income gain of 80.00 on your Income Statement - that amount shows on your "current period income (loss)" account.
    Not much to go one here.

    I looked at my profit loss and also checked where my balance sheet unbalances and its the 22nd of feb. On the 22nd there is also a £80.00 invoice but its in the correct category (Sales) like the rest

    I tried removing all transactions on this date but it still unbalances on this date, even removing the £80.00, it looks like its adding £80.00 from somewhere else but i can't understand how that is possible, on the 22nd i had £136.80 in sales, however its adding up £216.80
    This must be a bug right?

    22nd

    Transactions in People Per Hour

    edited September 25, 2019
  • KimptonKimpton Member Posts: 78 ✭✭

    No, It is definitely NOT a bug.
    You're using the balance sheet incorrectly.
    The BS reconciles your assets and liabilities; The basic equation is Assets - (Liabilities + Equity) = 0
    Retained Earnings is an Equity. Basic equation is RE = prior year balance + current period profit (loss).
    The BS measures a single point in time, typically year end.
    The Income Statement will track your profit or loss over a period of time.
    However, Wave will catagorise your Sales (an income statement account) into Accounts Receivable (a balance sheet account) until the cash actually clears the bank. Same with Expenses and Accounts Payable.
    Until your A/R and A/P accounts are zeroed out, either by posting the cash through your bank or by a journal entry adjustment your BS will not balance.
    Also your bank accounts should be reconciled monthly to assure you haven't missed a transaction.

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