Month-end close Updated November 2026

Balance sheet reconciliation

A balance sheet reconciliation compares each general ledger account balance to supporting evidence from outside the ledger (a bank statement, a subledger, a contract, a roll-forward schedule) and explains any difference. Every balance sheet account should be reconciled, with high-risk accounts done monthly and reviewed by someone other than the preparer.

Syntax

GL balance = Supporting balance + Reconciling items (each explained, dated and aged); reviewed and signed off

Part	What it is
`Support`	Statement, subledger, schedule, agreement or calculation
`Reconciling items`	Listed with amount, date, reason and planned clearing date
`Roll-forward`	Opening balance + additions - reductions = closing balance, for accounts without a statement
`Sign-off`	Preparer and reviewer with dates

Examples

Cash: GL 6,680; bank reconciliation adjusted balance 6,680

Result: Reconciled; support is the bank statement and the bank reconciliation.

Prepaid insurance: opening 2,400 - amortization 200 = closing 2,200; GL 2,200

Result: Reconciled by roll-forward to the policy schedule.

Accrued liabilities: GL 5,300; schedule of accruals 4,900

Result: Difference 400: a prior-month accrual reversed twice. Post the correction; the account then agrees at 4,900.

Common mistakes

Reconciling the ledger to itself (GL to a trial balance): the support has to come from outside the ledger.
Carrying unexplained items forward month after month: set an age limit and clear or write off with approval.
Skipping low-activity accounts: dormant balances hide old errors; reconcile them at least quarterly.

Practice Balance sheet reconciliation

These drills check your answer on live data, free, no account needed.

Rental company closeClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
The full workoutClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.

Questions

Which accounts must be reconciled every month?

Cash, receivables, payables, inventory, accrued liabilities, intercompany, payroll liabilities and tax accounts. Fixed assets and prepaids can be monthly or quarterly depending on activity.

What does a reviewer check?

That the support is current and independent, that the math ties, that reconciling items are valid and aging, and that the preparer did not simply plug the difference.

Month-end close checklistA month-end close checklist in sequence: cutoff, bank and card reconciliations, AR and AP, accruals and prepaids, fixed assets, balance sheet recs, lock.
Reconciliation controlsThe internal controls around reconciliations: the preparer does not handle cash, a reviewer signs off, statements come from the bank, items are aged.
Accounts receivable reconciliationReconcile accounts receivable by agreeing the general ledger control account to the customer aging, then explaining any difference: unapplied cash, journals.
Fixed asset reconciliationReconcile the fixed asset register to the general ledger with a roll-forward of cost and accumulated depreciation: opening, additions, disposals, closing.