Thread: Balance Sheet

Hi,
I would like to know if my Balance Sheet should balance with the Aging Report on the monthly basis?
Thank you

Originally Posted by mirandar

Hi,
I would like to know if my Balance Sheet should balance with the Aging Report on the monthly basis?
Thank you

The again report of accounts receivables is a break down of the total accounts receivables balance into time periods. If there is a discrepancy between these two results, one of the balances is incorrect. I would not feel comfortable to close my books knowing that I am "out of balance", whether that at the end of each month or at year end. For me, debit equals creedit is an irion cast rule that should not be broken unless you are prepared to run risks of unpleasant surprises in the future.
Werner Reisacher

Yes, the balance sheet and the aging report should always match. They reflect information that comes out of the exact same administration, and therefore any difference should be investigated. If you balance sheet tells you that your debtors owe you $10.000, but your aging list tells you that they owe you $150.000, then there is something wrong. Of course this also works the other way, if your balance sheet shows you that you owe creditors $10.000, but your aging list tells you that you need to pay out $150.000 to be debt free, then you might want to take some time see where this difference is coming from.

One of the reasons why these lists do not match, is the timeperiod. Sometimes the aging list also reflects unpaid/unreceived mutations from prior years, when the balance sheet does not. This tends to happen when the Annual Report is made by an external accounting firm, and the corrections have not been processed into the balance sheet by the company itself yet. Of course there are more reasons for differences.

Agings should reconcile to their related trial balance accounts. Typical reasons for being out of balance are top end adjustments mad to the TB account, i.e. manual invoices, voids, dollar adjustments, write offs, void checks/invoices, etc done at a level higher that bypasses the detail flow into the sub system.

A typical reason on the aging side are incorrect dates (future dated invoices) i.e. invoice dated a year in the future or the date was omitted. Also depending on the accounting system, corrupted data, system processing errors. Most and easiest to find will be on the TB side. As to the aging sometimes its just those mysterious electronic ghosts that sometimes appear. In that case the solution usually requires an IT vendor expert to force it into balance.

Once in balance it should stay in balance, if it goes out again it will be easier to track as you'll have a recent known point where all transactions can be examined to find the actual problem.

Originally Posted by mirandar

Hi,
I would like to know if my Balance Sheet should balance with the Aging Report on the monthly basis?
Thank you

From my experience, the aging report should match up with the balance sheet account for AR as long as your aging report shows all AR due. If you are taking a snapshot of aging of a specific timeframe (e.g., 4 weeks) and you have items due outside of that time period then it would not. If you do have all AR due and it doesn't match up you will have to find out why not.