Balance Sheet Check-Up

Now that your CAR, SES, and Transportation Reports are certified, it’s a perfect time to review your balance sheet—especially Accounts Receivable, Accounts Payable, and any Due To/Due From accounts. By the end of September, these accounts should typically be zero. Take a few minutes to check for lingering balances. 

If you see a balance, start by identifying the cause. Often, it’s the result of a year-end accrual entry that wasn’t reversed or was recorded incorrectly. In these cases, you may need to adjust the corresponding revenue or expenditure account or you may need to make an upward or downward adjustment, depending on the situation.

Determine if the balance was carried forward from a previous year. If the balance dates back to a prior year, the most appropriate fix is usually an adjusting entry to clear it. If it’s from the most recent fiscal year, review your GAAP transactions to trace where the balance originated. Then, confirm that the accrual wasn’t posted directly to the revenue or expenditure account instead of the receivable or payable. If it was, you can offset the balance sheet account with the related revenue or expense entry.

If you can’t tie the balance to a revenue or expense account, determine whether it should be cleared, often with an upward or downward adjustment.

Don’t wait until year-end—plan to review these accounts again in the spring so you don’t carry forward balances that shouldn’t be there.  

This is also a good time to review your Payroll Liability accounts to make sure that balances are reasonable and that you don’t have large debit or credit balances in these accounts beyond current payments due.  If they seem unreasonable, ensure that you are coding your benefits correctly and that deduction amounts are correct. 

Finally, consult with your auditor about how they prefer these situations to be handled. And if you’re a Vista Iowa client and need help with entries or account numbers, reach out to your Vista Consultants for support.