The solution below only applies if both of the following statements are true:

• You have an income or expense account that should have been an asset or liability account
• You closed your fiscal year while the account was set up incorrectly

Do not use these steps if you closed two or more fiscal years with the incorrect account type.
If you have not closed your year, and you need to change an incorrect account type, see How do I correct a General Ledger account set up as the wrong account type?

Close the proper amount to retained earnings as follows:

1. Make a back up of your data before proceeding. See How to Back up Company data with System Administrator including SQL Replicator
2. Go to General Ledger, Tools, Options.
3. Select the Audit setup activity check box and click OK.
4. Go to Setup, Accounts.
5. Click List, select the account with the incorrect account type, and click OK.
   NOTE: If you already corrected the Account type, change it back to the incorrect account type before proceeding.
6. Go to the Balances (Accrual) tab.
7. In the Prior year’s adjustment box, enter the amount closed to retained earnings with the opposite sign.
   • If you closed the account with a debit balance, enter the amount as a negative
   • If you closed the account with a credit balance, enter the amount as a positive
     Note: If your Accounting Method is Cash (File, Company Settings, General), change the Prior year’s adjustment box on the Balances (Cash) tab. If your Accounting Method is Both, then enter amounts on both tabs.
8. Click Save.
9. Click Close.
10. Go to Tasks, Close Fiscal Year.
11. Click Yes to backup message.
12. Select the correct prefix and click OK.
13. Click OK to warning about prefix year end.
14. Confirm that only accounts with an amount in the Prior year adjustment box appear in the Earnings Distribution window.
15. Click Accept.
16. Go to Setup, Accounts.
17. Click List, select the account with the incorrect account type, and click OK.
18. On the General tab, select the correct Account Type.
19. Correct the Current Balance and Future Balance on the related balance tab (Balances (Accrual), Balances (Cash), or both) to reflect the adjustment. Add the amount closed to retained earnings.
20. Click Save.
21. Click Close.
22. Go to Tools, Options.
23. Uncheck the Audit setup activity check box and click OK.
24. From the Reports menu, select Financial Statements.
25. Print a trial balance for the year-end period to confirm you made the proper corrections.

Note: If you use prefixes in General Ledger, verify that your base account is also set to the correct account type:

1. Go to Setup, Prefix/Base, Base Accounts.
2. Click List, select the base account that corresponds with the full account that had the incorrect account type, and click OK.
3. Select the correct Account Type for the base account.
4. Click Save.
5. Click Close.