Reconciliations
Creditors reconciliation
All monthly statements received from creditors must agree with the balances in the businesses’
books.
If any of these balances are not the same, it is necessary to prepare a Creditors reconciliation
Statement, as a form of internal control, to explain the difference between the figures.
It requires the comparison between the information in our books, Creditors individual accounts
in the Creditors ledger, with an external set of information, the monthly statement received from
the Creditor.
CJ - receive an Invoice
CAJ - receive a Credit note
CPJ - issue a cheque
CRJ - issue a receipt
GJ - error correction
Meathod of asking 1:
Creditors Control
- +
Creditors List
- +
Meathod of asking 2: “One on One”
My books of a certain creditor - Creditor’s Ledger
Creditors Control
- +
How to think in my books
Creditors Ledger
Date Day Details Folio Debit - Credit + Balance
Debit Note
Cheque
Discount received
Invoice
Interest on o/d account
, The Creditors books - Statement of account, “Debtor’s Ledger”
Debtors Control
+ -
How to think in their books
Statement of account
Date Day Details Folio Debit + Credit - Balance
Invoice
Interest on o/d account
Receipt
Discount allowed
Credit note
Creditors Reconciliation Statement
Debit + Credit -
Debit balance as per statement of account Always
Invoice understated x
Invoice overstated x
Outstanding cheque x
Credit note not recorded x
Credit balance as per Creditors Ledger Always
x x
If not balanced - Take the difference
1. Multiply by 2, left out amount or debited instead of credited (and vis-versa)
2. Divide by 2, left out amount or debited instead of credited (and vis-versa)
3. Divide by 9, if the answer is a whole number, look for number switching
Creditors reconciliation
All monthly statements received from creditors must agree with the balances in the businesses’
books.
If any of these balances are not the same, it is necessary to prepare a Creditors reconciliation
Statement, as a form of internal control, to explain the difference between the figures.
It requires the comparison between the information in our books, Creditors individual accounts
in the Creditors ledger, with an external set of information, the monthly statement received from
the Creditor.
CJ - receive an Invoice
CAJ - receive a Credit note
CPJ - issue a cheque
CRJ - issue a receipt
GJ - error correction
Meathod of asking 1:
Creditors Control
- +
Creditors List
- +
Meathod of asking 2: “One on One”
My books of a certain creditor - Creditor’s Ledger
Creditors Control
- +
How to think in my books
Creditors Ledger
Date Day Details Folio Debit - Credit + Balance
Debit Note
Cheque
Discount received
Invoice
Interest on o/d account
, The Creditors books - Statement of account, “Debtor’s Ledger”
Debtors Control
+ -
How to think in their books
Statement of account
Date Day Details Folio Debit + Credit - Balance
Invoice
Interest on o/d account
Receipt
Discount allowed
Credit note
Creditors Reconciliation Statement
Debit + Credit -
Debit balance as per statement of account Always
Invoice understated x
Invoice overstated x
Outstanding cheque x
Credit note not recorded x
Credit balance as per Creditors Ledger Always
x x
If not balanced - Take the difference
1. Multiply by 2, left out amount or debited instead of credited (and vis-versa)
2. Divide by 2, left out amount or debited instead of credited (and vis-versa)
3. Divide by 9, if the answer is a whole number, look for number switching
