Learning Together About ERP

The ledger is a collection of accounts from the main account that collects all the transactions that are recorded for the business. When someone reconciles a general ledger, this usually means that every account in the general ledger is being reviewed to ensure that the source document matches the balance shown in each account. The reconciliation process is the same activity shortly before the auditor's arrival for the annual audit, to ensure that the accounting records are in a clean condition.

The account-level reconciliation process usually consists of the following steps:

• Investigate the beginning balance. Match the beginning account balance to final reconciliation details from the previous period. If the amount is not appropriate, investigate the reason for the variant in the previous period. If the account has not been reconciled for some time, it's possible that the error was in some periods ago.
• Investigate the current period. Match the transactions reported in the account within the specified transaction period and adjust as necessary.
• Adjustment of review. Review any adjusting entries recorded in your account within a certain timeframe, and adjust as necessary.
• Reversal of review. Make sure all journal entries that should be reversed in the period have been canceled.
• End the review of the balance. Verify that the final details for the account match the final account balance.

The general ledger reconciliation concept may also refer to the general ledger's overall examination to ensure that all accounts are incorporated into the financial statements. This reconciliation process involves the following steps:

• Summarizing the final balance in all revenue accounts and verifying the total amount has corresponding to the amount of revenue in the income statement.
• Summarize the final balance in all expense accounts and verify that the total amount has corresponded to the total cost in the income statement. This can be done at the level of an individual expense line item in the income statement.
• Summarize all assets, liabilities, and equity and verify that the total amount corresponds to each line item on the balance sheet.

A general ledger reconciliation can also mean an unwarranted general ledger investigation, ie when the total of all debits is not equal to the total of all credits in the balance sheet balance. This process involves investigating the amount of debits and credits at the individual account level to see which account contains unsuitable debits and credits