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Reconiling old bank balances

We have a number of different bank accounts (current, deposit, PP etc…). One or two of them the balances are well out and have been for a number of years.

I don’t want to go through and find the errors as it will take me ages. I would rather just make an adjustment at the year end (April) and then they are all correct and I will monitor on a monthly basis going forward. Is there a way to make the balance correct that wouldn’t reflect in the P&L etc…

What is the best way to approach this? Any help would be much appreciated.

Thanks,

Hi @darrell_j_freeman,

A journal may work for this, the only thing is you would get the reversing entry showing up in the balance sheet.

I would have suggested an opening balance - but you cannot enter an opening balance if there are transactions that happen before the opening balance date - so I don’t think this would work in your case.

We don’t use the balance sheet, we do that manually at year end. So maybe that is the solution?

Would a journal affect the P&L?

It would depend on which nominals you were using for the journal

If you’re a sole trader or partnership then the simplest solution would be to treat the difference as a movement of capital, entering the correction as money in or out on the bank account(s) and tagging it with “something not on the list” to nominals in the 3xxx range - either “capital introduced” (if the balance is too low) or “drawings” (if the balance is too high). This won’t affect the profit and loss, and the balance sheet will still balance as the difference has moved to the capital section.

But as always check with your accountant if you’re at all unsure.

If you’re a limited company then I don’t know what you’re allowed to do as it may affect the figures that go into your companies house accounts, you’ll definitely have to ask an accountant in that case.

Which nominals do not effect the P&L?

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