Reconcile Bank Accounts

Once all of your journal entries for the month have been posted to the General Ledger, you need to balance it. That is, you need to ensure that the sum of the asset and expense accounts equals the sum of the liability, equity, and revenue accounts.

To do this, you add up the balances from each account to create an unadjusted trial balance. More than likely, you will discover one or more mistakes. If this happens, you will have to use your sleuthing and deductive reasoning skills to try to identify where the error occurred.

Once identified, you can enter an adjustment into the General Ledger to correct the amount. Then, you add up your accounts and see, again, if they balance. It may take several rounds of adjustments and adjusted trial balances until you get it right.

When your accounts balance, you can generate reports that indicate the overall financial health of your organization.

These reports include:

Balance Sheet. This document provides a snapshot of your organization's overall financial situation at the given moment in time. The Balance Sheet is also sometimes referred to as the Statement of Financial Position.
Income and Expenditure Statement. This document shows whether an organization has made any money in the given month or not. The Income Statement is also sometimes referred to as the Profit and Loss Statement for private sector organizations.