General Ledger Reconciliation and Analysis

See also:
Account Reconciliation
Standard Chart of Accounts
Problems in Chart of Account Design
Cash Flow Statement
Income Statement
Subsidiary Ledger

General Ledger Reconciliation and Analysis Definition

Define a general ledger as the financial record of every transaction of a company. Commonly, it is referred to as the “books” of the company. In the general ledger, record each of the transactions twice as both a subtraction (debit) and addition (credit). The general ledger is the main accounting record of the company.

Consequently, general ledger reconciliation is the process of ensuring that accounts contained in the general ledger are correct. In short, reconciliation makes sure you place the appropriate credit and debit in the associated accounts. Seemingly simple, this process requires an experienced bookkeeper when applied to small companies. Complicated applications require the hand of a trained CFO or equivalent controller. In either situation, a general ledger reconciliation policy must by enacted to ensure consistency.


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General Ledger Reconciliation Explanation

Not every general ledger account has a detail subsidiary ledger to reconcile to. Monthly all balance sheet accounts should be analyzed for accuracy. In addition, periodically it may be necessary to reconcile revenue accounts, expense accounts and miscellaneous balance sheet accounts.

In these cases the procedures are similar to reconciling an account to a subsidiary ledger. Print a detail general ledger transaction report for the account. Then, eliminate reversing journal entries correcting errors. Finally, investigate any transactions that are unusual in nature. For example a debit entry or decrease to a revenue account would be unusual.

Finally, prepare a detailed schedule of transactions remaining in the final balance.

General Ledger Reconciliation Process

Some wonder “what is general ledger reconciliation?”. Others wonder how to do general ledger reconciliation. For bookkeepers, adhere to the following process:

First, study the accounting policy of the company. Ignorance to this is missing the essential foundation of the process; knowing the rules is key.

Then, gather information. These include receipts, invoices, account statements, invoices, and related financial reports. This data is the information the accounting staff puts into accounts.

Third, ask questions about the accounts. What items did the company purchase? Do they relate to company policy? Why are they included in the given account? When were they spent/made?

Finally, document your work. Proper documentation ensures properly reconciled accounts as much as it ensures effective bookkeeping in the first place.

General Ledger Reconciliation Template

A general ledger reconciliations template can be found at: Microsoft Templates.

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General Ledger Reconciliation and analysis

Originally posted by Jim Wilkinson on July 23, 2013. 

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8 Responses to General Ledger Reconciliation and Analysis

  1. gio October 2, 2015 at 3:25 am #

    accounting

    • Nancy November 27, 2015 at 8:05 am #

      this sounds intresting. kindly provide an example of a GL reconciliation

      thanks..

      • Sam smith May 22, 2017 at 4:45 pm #

        If you want to know more kindly come to my accounting firm or call 08027463244

        • PAUL July 17, 2017 at 12:08 pm #

          Do you offer training on this and Finance roles generally ?

  2. Rady January 14, 2016 at 12:36 am #

    Can you give Supplier & Creditors Reconciliation Example.

  3. Rehaan Khan June 27, 2017 at 8:57 am #

    If a bank a/c XXXX8046 have 2 GL,

    1st main a/c GL-61513410
    2nd Clearing a/c GL-61513411

    In this case debit entry will hit Main A/c GL and Credit entry will hit Clearing GL.
    So we reconcile Main and Clearing GL.

    If you need more information feel free to contact +919899091028

  4. Ashwaq mohiuddin mohammmad February 20, 2018 at 12:35 pm #

    Can we find the training institute in hyderabad location,which proviude the training regarding the GL reconcillation and others.

    • Lauren Jefferson February 20, 2018 at 3:06 pm #

      Hi Ashwaq! Check out our From Operations to P&L Leader Workshop here: http://bit.ly/2Eeoy0Y

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