What is the best way to reconcile accounts payable or any other balance sheet account?
Answer:
As the last person Excel is a good start, here's how I would reconcile A/P, A/R, Cash, Debt (relatively easy accounts to reconcile).
You need to set up a rollforward table in excel at the top of spreadsheet (Row 1) list the following titles for your columns,
Beginning Balance, increases (i.e. what caused this account to increase), decreases (i.e. what caused this account to decrease), ending balance (this should be the month end balance you are reconciling to). Note: Fancier titles may be used.
In the columns under the titles you've just listed in row A you can list your various accounts (Column A), the increase catalysts in Column B (cash receipts, increase in A/R, A/P, or new debt, etc.), Column C the cause for account decreases (cash outflows, decrease in A/R b/c of cash receipts, decrease in A/P or debt b/c of cash payments). Column D should be the formula
=A+B-C.
Remember to keep invoices/receipts (to keep track of cash payments, increase in A/P etc.) or what was sent to customers to help keep track of A/R) and bank statements (to help track increase in cash, debt payments, etc.) to help you provide proof of what caused the increases and decreases.
Excel
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