If you have entered transactions in previous fiscal years, but only need to reconcile this fiscal year, you can create an adjustment entry to reset your Wave balance to match your bank balance on the last day of the prior fiscal year.
In order to add an adjustment entry, you’ll need the ending bank balance on the last day of your previous fiscal year. Make sure to get this information from your online banking, or a historical statement before creating the adjustment entry.
NOTE: there can be accounting implications if your previous years/periods are not reconciled. Please ask an accountant for guidance on whether this is the right call for your business. In general, we always recommend reconciling all of your records!
Create an Adjustment Entry
- Go to Reports and run a Trial Balance for the account you need to reconcile. Make the date the last day of your fiscal year. This report will show you the Wave balance of the account on this date.
- Calculate the difference between your bank balance and the Wave balance you found in Step 1.
- You need to create a special account that you’ll use to offset the change made to your account balance. Go to Accounting > Chart of Accounts in the left-hand navigation. Under the Equity tab, find the Business Owner Contribution and Drawing subgroup, and click Add Account. You’ll need to choose a name for this account, like Uncategorized Equity. You can always change this later.
- Head to Accounting > Transactions > More (top right corner) > Add journal transaction
- Create an adjustment to change the balance of the account. If the Wave balance was higher than the bank balance you’ll need to decrease the Wave balance. If the Wave balance was lower than the bank balance you’ll need to increase the Wave balance.
Remember: A debit increases an Asset account, like your Checking Account, and decreases a Liability account, like your Credit Card.
Continue Your Reconciliation
Now that you’ve added an adjustment, you can return to the Reconciliation page to continue your reconciliation.
For more on how Reconciliation works in Wave, you can read our complete guide.
- Go to Reconciliation from the left-hand menu. On the accounts list page, find the account that you just adjusted.
- If you haven’t yet reconciled the account, click Get Started. If you’ve already started, click the arrow next to the account balance to expand to the account timeline view. Click Add period.
- If you haven’t already done so, add the bank ending balance for the date of the adjustment entry you created in part 1 of this tutorial. Click Save.
You’ll see the period ending on the last day of your previous Fiscal Year is now Reconciled.