10/01/2026
Just Because the Bank Balance is Right, Doesn't Mean the Books are Right!
I LOVE to read. I love fiction! But I don't like it when it comes to your books. These are the books you use to make everyday business decisions and to file your income tax return at the end of the year. There is no place for fiction here.
Clients tell me, “But my bank balance is right.” I hear variations of this fairly often. And that's certainly a good place to start. But your checking account is only one account on your balance sheet.
What about Accounts Receivable? Does that customer really still owe you $40,000?
Is Accounts Payable right? That bill is dated 3 months ago. Have you already paid it?
And what about credit cards, loan balances, payroll liabilities, sales tax payable? Are those balances accurate? You are making business decisions based on your cash flow, but what if these numbers are wrong?
What about that pesky account called undeposited funds? If that's a mess, there is a very good chance that you have recorded duplicate income.
Do your fixed assets reflect the fixed assets you still own? This list is very likely used, or partially used, when you file your personal property tax information at the end of the year and submit it to your Missouri county office.
What exactly is owner equity and is it anywhere near accurate?
A bank reconciliation tells me that the checking account may be right. It doesn't tell me the books are right.
That’s why I believe every balance sheet account should be reviewed and reconciled, not just the bank account.
Your balance sheet tells a story. My job is to make sure it isn't fiction.
