Advanced Balance Sheet Reconciliations

There are some balance sheet accounts that will take much more time to reconcile than others. The degree of difficulty in working out what makes up certain balances is likely to depend on the size of the business, which may affect the volume of transactions that are adjusted against different accounts. Let's start with fixed assets.

Reconciling Fixed Assets

Fixed Assets, also known as tangible assets, are items of capital expenditure. This can sometimes involve investing a significant amount of spend that affects cash flow or might require a loan of some kind.

The cost of such assets, such as a delivery van, will not immediately impact the profit and loss. The cost of, say, £20,000, could be spread evenly across the profit and loss over the length of what is called its estimated useful life. This could be four years.

Depreciation is used to adjust the profit and loss over the required timeframe. In this example, it would...