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Four tests to make sure your general ledger accounts are correct

by , 05 May 2014
Before you create management reports, use your accounting software to create a summary of all the different general ledger accounts, AKA trial balance. Remember to double check to make sure your trial balance is correct.

Let's have a look at the four 'reasonableness tests' you can do to check if your data records are accurate so you're sure all your general ledger accounts are correct each month.

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Four tests to make sure your general ledger accounts are correct

Test #1: The best test is to compare the monthly balances and investigate any unexpected fluctuations. Make an Excel summary of the monthly movements in each trial balance account. It's best to do a manual trial balance on these monthly summaries. This way you'll easily spot any inaccuracies.

Test #2: Compare your current month's figures to the same month in the prior period. If you find large differences – investigate these.

Test #3: Ensure the fixed asset balances all compare to your fixed asset registers.

Test #4: Run some preliminary ratios and compare them to the ratios from the prior 12 months. Investigate any large fluctuations.

At first this process can take a long time. But practice makes perfect! And accurate accounting reports are worth the time they take.

For the step-by-step guide to using one set of data for both management and financial accounting reports, turn to chapter A03: Accounting reports – internal vs external reporting in your Practical Accountancy Loose Leaf. Don't have one? Click here.

Until next time,

Philip Rosenberg, Managing Editor, Practical Accountancy Loose Leaf

P.S: Don't miss out on the opportunity to book your seat for the IFRS for SMEs Workshop 2014. Email seminars@fsp.co.za to get your name at the top of the list when bookings open.


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