Accounts Reconciliation Services
Balance A/P sub ledger to General Ledger A/P account
The general ledger is the chief accounting record of a business which uses double-entry bookkeeping. It will typically contain accounts for such items as fixed assets, current assets, liabilities, revenue and expense items, gains and losses. Every General Ledger is allocated into debits and credits sections. The left hand side lists debit transactions and the right hand side lists credit transactions. This provides a 'T' shape towards each individual general ledger account.
The general ledger is an assortment of the group of accounts that supports the value items shown in the main financial statements. It is erected up by posting transactions recorded in the sales daybook, purchases daybook, cash book and general journals daybook. The general ledger may remain supported by one or more subsidiary ledgers that offer details for accounts in the general ledger. For example, an accounts receivable subsidiary ledger would comprise a separate account for each credit customer, following that customer's balance distinctly. This subsidiary ledger would then be totaled and compared with its controlling account (in this case, Accounts Receivable) to make sure accurateness as part of the procedure of formulating a trial balance.
The sub ledger, or subsidiary ledger, is a subset of the general ledger used in accounting. The sub ledger displays detail for part of the accounting records such as prepaid expenses, property and equipment, etc. The detail would contain such items as date the item was purchased or expense sustained a description of the item, the original balance, and the net book value. The total of the sub ledger would match the line item amount on the general ledger. This conforming line item in the general ledger is referred to as the controlling account. The subsidiary ledger balance is associated with its controlling account balance as part of the procedure of preparing a trial balance.
As part of an audit, a technique of testing balances might contain tracing individual achievements to the subsidiary ledger for amounts and descriptions. The impartial of this test is to regulate that the current-year attainments schedule decides with connected sub ledger amounts, and the total decides with the general ledger.
Balancing the accounts payable sub-ledger
This technique verifies that the beginning sub-ledger balance (total of all open invoices) plus the net accounts payable activity (transaction totals) for the day equals the ending sub-ledger balance for the day. This procedure is discussed to as balancing the sub-ledger. The balancing procedure may be achieved at the end of each day once all activity for the day has remained managed, or during the following morning, if the proper reports are run at the end of each day. To balance the sub-ledger you must accomplish the following steps.
• Make sure that no accounts payable activity is being managed for the date being balanced. This will not be a subject if you are balancing to reports run at the end of the previous day.
• Create a valid ending sub-ledger report. The Open Accounts Payable or the Accounts Payable Aging report may be used for this determination. The AP sub-ledger is accustomed as transactions are managed. The ending sub-ledger report is a point in time report (a snapshot of the invoices at that point in time). The ending sub-ledger report should contain all activity through the end of the day being balanced and no activity after that date. An effective report can only be created if it is run at the proper time. This is usually proficient through running the report after hours as part of the nighttime procedure. The report can remain managed automatically by the system at night and the system date can be changed to make sure that the next day’s transactions will be sent using the proper date. This produces a report with an effective cutoff.
• Confirm that the sub-ledger was in balance at the end of the prior day. The only method to prove that the beginning balance being used during this process is valid is to have already balanced the sub ledger for the prior day’s activity. This verifies that the sub ledger beginning balance has a valid cutoff (that it includes all activity thru the end of the prior days handling and no activity from the current days handling). If the prior day’s activity is not in balance, then you should either balance it first, or balance the activity for the whole period subsequently the last time that the sub ledger was confirmed to be in balance.
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