Add a year-end adjustment to reset prior fiscal year reconciliation

Create an adjustment entry

Continue your reconciliation

Creating an adjustment entry for a specific bank account resets your Wave balance to match your bank balance on a specific date. Adjustment entries can be used if you have entered transactions in previous fiscal years, but only need to reconcile the current fiscal year.

There can be accounting implications if your previous years or periods are not reconciled. Ask an accountant for guidance on whether this is the right decision for your business.

Create an adjustment entry

First, determine the difference between your bank balance and your Wave balance.

  1. Find the ending bank balance on the last day of your previous fiscal year from your bank statement or historical statement.
  2. On the left-side menu, click Reports.
  3. Click Trial Balance.
  4. Click the calendar icon in the top filter section and set the date as the last day of your previous fiscal year. For example, if the current fiscal year began on January 1, 2024, you will select the date as December 31, 2023.

  5. Locate the balance beside the account you need to reconcile as of this date.
  6. Calculate the difference between your bank statement balance and the Wave balance for this specific account.

Next, create an account to offset the balance.

  1. On the left-side menu, click Accounting > Chart of Accounts.
  2. Click Add a New Account.
  3. In the Account Type drop-down, scroll to the Equity section, then select Business Owner Contribution and Drawing.
  4. Enter an account name, such as Uncategorized Equity, and an Account ID and Description, if applicable.
  5. Click Save.

Lastly, create a journal entry to offset the account balance.

  1. In the left-side menu, select  Accounting > Transactions.
  2. Click More in the top right, then click Add journal transaction.
  3. Select the accounts to debit and credit. You should select the account you want to reconcile and the account you created to offset the change in account balance.

  4. Enter the amount of the balance difference you found between your trial balance and your bank statement to adjust the balance of the bank account.

A debit increases an asset account, like your checking account, and decreases a liability account, like your credit card. Learn about debits and credits in Introduction to Debits and Credits.

If the Wave balance is higher than the bank balance, decrease the Wave balance. If the Wave balance is lower than the bank balance, increase the Wave balance. For example, if the Wave balance is $62.35 less than the checking account balance, debit the checking account and credit the Uncategorized Equity account.

Continue your reconciliation

Now that you’ve added an adjustment entry, you can return to the Reconciliation page to continue the reconciliation of the new fiscal year. Learn how reconciliation works in Wave in Reconcile your books.