Caines Hodges
General Ledger Clean Up
The general ledger is the core of your company’s financial records. These records constitute the central “books” of your system. Since every transaction flows through the general ledger, a problem with your general ledger throws off all your books.
Having us review your general ledger system each month allows us to hunt down any discrepancies such as double billings or any unrecorded payments. Then we’ll fix the discrepancies so your books are always accurate and kept in tip top shape.
The five areas of your financial statements that we check monthly are :
- ZInventory
- ZAccounts Receivable
- ZFixed Assets
- ZLiabilities and Loan Accounts
- ZPayroll Accounts
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Taking the time now to review these key accounts in your general ledger will ensure accurate financial statements and make future period closing activities easier to handle.
- Inventory. Inaccurate inventory on your balance sheet can have grave consequences. If your balance sheet shows more inventory than you actually have, you may not be able to fulfill orders and risk losing business. If your balance sheet shows less inventory than you have on hand, you might procure more inventory than you need. In both cases, you run the risk of having inventory you can’t sell.
- Accounts Receivable. In an ideal world, you provide a good or a service to your satisfied customer, who then pays you within an agreed-upon timeframe. Unfortunately, invoices get lost, priorities get shuffled, or a customer’s payable contact leaves for another job. An open invoice could also simply be the result of a mistake.
- Fixed Assets. It’s easy to leave old fixed assets on your balance sheet after they’ve been disposed. Doing this can create a whole host of problems, including an understatement of net income, tax compliance issues, and an inaccurate business valuation. State sales tax agencies also like to look through your fixed asset listing to see if you failed to properly pay use tax.
- Liabilities and Loan Accounts. All loans have two components: principal and interest. A portion of every payment goes to pay down the principal on the balance sheet and a portion goes to paying interest expense. These principal and interest amounts change every month based on the loan’s amortization schedule. The most common mistake when recording your loan payments is assigning the entire monthly payment to EITHER principal OR interest expense.
- Payroll Accounts. Properly accounting for paychecks can be complicated. For example, gross payroll amounts and payroll taxes hit your income statement as an expense while employee tax withholdings go on your balance sheet until they are remitted to the appropriate taxing authority. Add in benefits and other taxes and you could have a mess.