Balancing Your Books

For your books to balance:

1. Daily cash and bank columns on your synoptic ledger should agree with bank records. For example, the amount entered on your daily cash sheet should equal the amount of money deposited in the bank. And the amount of money your synoptic ledger says you have in the bank, after all debits and credits to your bank account are recorded, should be the same as what you actually have in the bank (with bank adjustments). Your bank balance as shown on your synoptic ledger can be verified each month when you receive your bank statement and cancelled cheques.
2. Both your accounts payable and your accounts receivable ledgers should agree with entries in your synoptic ledger. For example, at any given time, the total amount owing your business from customers listed in your accounts receivable ledger should equal the accounts receivable amount listed in your synoptic ledger.

There is nothing magical or difficult about balancing your books. In fact, there's nothing else your books can do but balance if you write down every transaction as described throughout this chapter.

Here's a few final reminders. When keeping your synoptic ledger, make sure you do the following:

• Transfer all items from your daily cash sheet
• Remember to post the cash over or cash short
• Enter (post) all changes made in your accounts payable and accounts receivable ledgers
• Post and explain all cheques written
• Write notes on the ledger (to yourself and your accountant) when necessary

Bank Reconciliation

To prevent you from writing NSF cheques, and to enable you to identify excess funds that you can use to reduce your accounts payable, it is important that you are at all times "reconciled" with the bank. To be reconciled with your bank simply means that you know the "true" amount of your bank balance at all times, including between bank statements. If your synoptic ledger is up-to-date, it will give you an accurate daily record of your reconciled bank account.