What Are the Causes for Bank Reconciliations & a General Ledger Not Balancing? (2024)

FAQs

What Are the Causes for Bank Reconciliations & a General Ledger Not Balancing? ›

However, in reality, there may be discrepancies between the sub-ledger and general ledger balances due to various reasons such as errors in data entry, timing differences, or system glitches. Therefore, it is essential to perform regular balance sheet reconciliation to identify and correct any discrepancies.

If bank reconciliation doesn't balance, an error of some kind is indicated—be it a numerical mistake, oversight, or duplication, a human error in comparison or adjustment, or a software problem. Companies might choose among several options for addressing the mismatch.

Common reasons for the general ledger being out of balance are system errors, hardware failures and half journal entries entered in error.

One of the most common causes of bank reconciliation errors is missing or duplicate transactions. This can happen when you forget to record a payment, deposit, or transfer in your accounting system, or when you enter the same transaction twice by mistake.

Final answer:

The 3 conditions that can cause an inaccurate beginning balance in a bank or credit card reconciliation are: changing a reconciled transaction's status to not reconciled, changing the amount of an unreconciled transaction, and changing the amount of a reconciled transaction.

Outstanding Checks- these are checks already issued by the company but are not yet encashed by the creditors, thus, not yet deducted from the bank balance. Deposits in Transit - these are deposits made after the cutoff, thus, not yet credited by the bank. Errors- these could both be seen in both book and bank balances.

The purpose of this bank reconciliation process is to detect any errors in recording transactions. It also means the business has an up-to-date and accurate view of its exact bank balance on a specified date. This can help spot any unusual or irregular payments that might indicate fraud.

When your bank account balance is less than your QuickBooks balance: If there are expenses which have cleared the bank but haven't been entered into QuickBooks, the balances will differ. These could be handwritten checks that have cleared the bank, but not yet been entered into your check register.

Failing to match business transactions to a statement could stop you from making the correct tax return, even if you provide your accountant with all your company's cash records. Monthly bank reconciliations help to prevent this.

How to fix ledger balance? ›

There are two ways to make correcting entries: reverse the incorrect entry and then use a second journal entry to record the transaction correctly, or make a single journal entry that, when combined with the original but incorrect entry, fixes the error.

Very often, a problem with the bank reconciliation is the result of "typical" errors, such as: Making an entry twice, which produces a discrepancy equal to the amount of the entry in question. Not accounting for a transaction, which will also produce a discrepancy equal to the amount of the overlooked entry.