Incorrect GL account type Balance Sheet > Income Statement

Our client has a few GL account configured as Balance Sheet account instead of Income Statement account.

The account was incorrectly created as a balance sheet  account.

We need to change the account type to income statement but firstly, correct the balance brought forward from the previous year.

These accounts has transactions going as far back as 2018.

Anyone has any suggested approach to change the account type and correct the balance?

  • I think you will want to leave the accounts as Balance Sheet accounts while you do this, then close the net change for those accounts for those years to retained earnings via manual journal entries. Then, once their current year's opening balances are zero and everything else looks good, change those accounts to Income Statement accounts.

    Backup before posting the manual closing J/E's.