Summary
In this chapter, we've learned that every single account category that appears on the balance sheet should be reconciled fully. This simply means it is fully understood what any figure reported represents.
Simply printing a lengthy report is not good enough when it may comprise lots of debits and credits that eventually contra (cancel each other out), so it's important we are left with just the current values visible.
Some balance sheet reports should be simple to reconcile, and these are as follows:
- Bank accounts and credit cards
- Trade debtors and creditors
- Undeposited funds
- Stock
- Payroll liabilities
- VAT (when standard and in-line with year-end dates)
Other balance sheet accounts that may require more work:
- Fixed assets
- Accruals, prepayments, deferred income, accrued income
- VAT on a cash basis
As with everything, reconciling the balance sheet is made much easier if the bookkeeping has been done well...
