The main reason to use the general ledger reconciliation by the accountants is to ensure that the integrity of the account balance is error-free on the general ledger of a company. The importance of general ledger reconciliation is real because it helps to compare the general ledger account balances with data of third parties, other independent systems or supporting documentation etc.

Such reports and statements are to ensure the error-free work and completion of the balances. This process also helps to identify problems and find professional ways to resolve them. A company that intends to release its financial details to the public also wishes to verify the final information.

General ledger reconciliation works as the key tool here. Before we delve further into the discussion, we better have a look at the point of discussion in today’s article. This includes the following:

• Learn To Prepare General Ledger Reconciliation
• Importance of General Ledger Reconciliation
• Final Thoughts

Learn To Prepare General Ledger Reconciliation

Once the financial reporting period ends. it is time to process General Ledger Reconciliation. Before the process begins, the accountants ensure the accuracy of information provided in the general ledger of a company. Normally following steps are taken to make a General Ledger Reconciliation:

1. Gather important details of the general ledger account.
2. Comparison of General Ledger accounts with other supporting documentation.
3. Investigation of Discrepancies
4. Corrective Journal Entries

Gather Important Details of the General Ledger Account:

When you decide to prepare general ledger reconciliation, the first thing to do is that you gather the necessary information about the general ledger account. Most of the time it is the balance available at the ending period. This depends on the type of account you have.

Sometimes the activity of the account is also required. This may include the debit and credit details of the account.

Comparison of General Ledger Accounts with Other Supporting Documentation:

Comparison of general ledger account balance with the data collected from independent systems is the next step after you are done with getting the required information. Credit card statements and bank statements are a few such examples.

This is considered to be an important step in the process of preparing general ledger reconciliation.

Investigation of Discrepancies:

In case there have been discrepancies identified between the details of the general ledger account balance and the supporting documentation. Serious actions are taken to fix the discrepancies. The reasons for such problems could possibly be missing transactions, time differences, or other mistakes.

All the discrepancies do not refer to the real mistakes in the general ledger account balance. So it is important to do an accurate investigation.

Corrective Journal Entries:

Because of the need for corrective journal entries, accountants must get their hands on preparing for corrections of possible errors.

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Importance of General Ledger Reconciliation

In order to ensure the accuracy and completeness of the financial statement and the general ledger, General ledger reconciliations are considered to be a must process. As it will help to avoid significant errors, increase the factor of accuracy as well the problems are resolved in time.

Some prominent factors of general ledger reconciliation that bring benefits include the following:

• Error-free work
• Timely Adjustments
• Accuracy Factor

Error-free work: When a discrepancy is handled in a professional manner, it is handled well. This results in the need for investigation. The process of investigation increases the accuracy of the financial statements.

Timely Adjustments: In case of discrepancy identification, it is required to do adjusting journal entries. This adjustment record improves the accuracy of the financial statement.

Accuracy Factor: A feeling of confidence and comfort comes with the process of general ledger reconciliation that ending balance and activity captured is error-free. This is possible because the balance is compared with supporting documentation as well.

Final Thoughts

Now that you have developed a better understanding of the Importance of General Ledger Reconciliation, we can sum up the discussion finally. General ledger reconciliation only brings the required result when handled appropriately. This needs professionals to ensure a seamless working process.

We hope these few minutes of reading will help you to make the right choice in accounting.

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Disclaimer: The information about the Importance of General Ledger Reconciliation provided in this article is general in nature and does not intend to disregard any professional advice.