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How to Reconcile Balance Sheet

To reconcile balance sheet is needed because after doing this, our balance sheet will show correct and fair view of our business's financial position. Before knowing the steps of reconciliation of balance sheet, we should know the meaning of it. Balance sheet reconciliation means to know the reasons of difference among the different items of assets and liabilities. Cash book should reconcile with bank statement. Inventory and other fixed assets  should reconcile with physical quantity. Debtors and creditors should reconcile with ageing schedule balances. Following are its main steps

1st Step: Reconciliation of Cash Book

Cash at bank is important current asset in balance sheet. If there is difference between our bank statement and cash book, we first find the reasons behind this before showing closing cash at bank in balance sheet. For this, we should compare both cash book and bank statement. By taking balance of cash book, we have to adjust it with bank statement.

2nd Step : Reconciliation of Debtors and Creditors 

Sometime balance of debtors and creditor may be different when we compare trail balance's balance of debtors and creditors with the balance according to ageing schedule. Ageing schedule means the time when we will get or paid money. After this, what money will be receivable and payable should match the book balance. We should note the reasons of not matching both.

2nd Step : Reconciliation of Inventory and other Assets 

Reconciliation of inventory and other assets means to know the difference between actual quantity and book quantity. If reasons are found, then we have to show it as adjustment in balance sheet.

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Accounting Education: How to Reconcile Balance Sheet
How to Reconcile Balance Sheet
Accounting Education
https://www.svtuition.org/2011/09/how-to-reconcile-balance-sheet.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2011/09/how-to-reconcile-balance-sheet.html
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