Reconcile Accounts Payable – Is It a Real Challenge?
Posted by: Dr. Devaansh | Posted on: April 19th, 2016
Your current liabilities reported in the balance sheet are accounts payable. Now in order to close the books, monthly and yearly, you need to reconcile your accounts payable. Usually, accounting staff of any company uses a general ledger balance (total sum) and a subsidiary balance (details of accounts) to assess the total of all accounts payable.
Tips enlisted can be used as ready reckoner to reconcile the master accounts payable and its records.
- Compare ending accounts payable account balance in the general ledger for the immediately preceding period to the aged accounts payable detail report as of the end of the same period. If these numbers are not in sync with each other, it means you will have to reconcile earlier periods before taking the next step of reconciling the current period. If the variance is immaterial, it may be acceptable to proceed with the reconciliation for the current period.
- A spreadsheet program to set up the reconciliation of accounts payable may prove really helpful. Use column A to input the balance of accounts payable as per the general ledger. Use column B to input the detailed balance of accounts payable. If these two match, the account is reconciled and you are good to go. If there is a reconciling difference, than you know that there is lot on your plate.
- You need to evaluate items in the detail of accounts or subsidiary that are not in general ledger. Also, note any items in general ledger are not there from the detail of accounts. Add and subtract these items as suitable from each record.
- Print the ending aged accounts payable report for the current reporting period. Enter the total amount outstanding from this report on the reconciliation spreadsheet. At this point, the reconciliation should be complete. If there is still a discrepancy, and it is not a discrepancy that occurred in a prior period, consider the following additional reconciliation steps:
- Confirm whether the accounts payable journal was properly posted to the general ledger or not.
- Authenticate, that the aged accounts payable report was printed after all posting was completed.
- Verify that the general ledger is set to the correct reporting period.
This might seem one daunting task when you do it for the first time; but once you are done correcting and figuring out all errors it becomes relatively easy to update the reconciliation document at subsequent period.
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