This topic describes how to reconcile general ledger account balances with accounts payable and accounts receivable subledgers. Reconciliation is typically completed during each monthly and year-end financial close process but can be done more often if needed.
When using this process, be sure to run all reports for the same period and date.
Run a Balance Sheet.
Verify that Total Assets = Total Liabilities.
Run an Income Statement.
Verify that the Total Revenue - Total Expenses = YTD Net Income.
Verify that the YTD Net Income from the Income Statement = the YTD Net Income account balance on the Balance Sheet.
Run the AR Aging report and run the GL Trial Balance for the Accounts Receivable account.
Verify that the amount shown for Report Total from the AR Aging report = the Accounts Receivable account Ending Balance from the GL Trial Balance report.
Run the Accounts Payable Aged Invoices report and run the GL Trial Balance for the Accounts Payable account.
Verify that the amount shown for Report Total from the Accounts Payable Aged Invoice report = the Accounts Payable account Ending Balance from the GL Trial Balance report.
If all verifications pass, your financial statements are balanced. If any verifications fail, you must drill down into the detail transactions to determine what is causing the problem.
These are common causes for discrepancies:
The reports were not run for the same period/dates. For example, the AR Aging or Accounts Payable Aged Invoice report may have been run for a date range that did not match the period used for the GL Trial Balance report.
A transaction was posted directly to the Accounts Receivable or Accounts Payable account via the General Ledger Journal Entry screen.