Verify ledger balances against reliable evidence
Compare accounting records with independent or separately maintained documents, investigate differences and judge the limits of each check.
Cambridge International AS & A Level Accounting 9706, 2026–2028 syllabus, Version 2. These lessons cover Topic 1.4 only. Practice is self-checked, not an official Cambridge grade; the separately published 2029 syllabus, timed papers and human subject-teacher review remain outstanding.
Before you begin
- Use double-entry, ledger and trial-balance knowledge from Topic 1.2. Reconciliations compare records with independent or separately maintained evidence; an unexplained difference needs investigation.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
What is the purpose of matching an invoice to a ledger entry?
What you will learn
- Reconcile ledger accounts to internal and external documentation
- Explain why reconciliation and verification are used
- Evaluate their benefits and limitations
Choose evidence that tests the balance
A reconciliation compares a ledger balance with another record or source document. Examples include checking a trade payable ledger against a supplier statement, a trade receivable account against a customer's remittance advice, inventory records against a physical count, and the cash book against a bank statement.
Use both internal and external sources where they are relevant: compare separately maintained ledgers or count records with third-party statements, remittances and bank documents. Select evidence that directly tests the account and reporting date.
Use evidence that relates to the account and date being checked. Trace a disputed item from the ledger to its source document and, where useful, back from the document to the ledger. This tests both whether recorded items are supported and whether relevant items have been omitted.
Explain what a difference can reveal
Differences can arise from timing, such as an unpresented cheque, or from an error, such as a missed invoice, wrong amount, duplicate posting or item recorded in the wrong period. List each reconciling item and establish which record needs updating; do not alter a balance merely to make the two totals agree.
Reconciliations improve completeness, accuracy and accountability and can help find fraud or control failures. They do not prove that every transaction is genuine: collusion, forged documents, shared errors, poor timing or weak evidence can defeat a check. Follow up material and unusual differences.
Evaluate the benefits and limitations for the account and business involved. A supplier-statement comparison may provide independent evidence, for example, but a supplier's own error or a shared recording mistake can still leave the records incomplete.
Pause and explain
A supplier statement differs from the ledger by a payment the supplier has not yet allocated. What is the best next step?
Worked example
A supplier statement shows $8,460 due. The purchases ledger shows $8,100 because a $360 invoice received before year-end is not recorded. What should the accountant do?
Show the worked solution
- Match the supplier statement and invoice to the purchases ledger and confirm the invoice belongs to this business and period.
- Record the omitted purchase and payable using the correct accounts and date.
- Reconcile again and investigate any remaining difference rather than posting a balancing figure without evidence.
Answer Record the supported $360 invoice in the correct period, then reconcile again. The unexplained difference is not itself a valid journal entry.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A customer account is $2,400, but the customer's remittance shows a $2,000 payment and $400 settlement discount, both received before year-end. What should you verify and update?
Give me a hint
Match the remittance to cash evidence and the discount terms, then check both ledger entries.
Compare my reasoning
- Confirm that the $2,000 bank receipt is supported and relates to this customer.
- Check that the $400 discount is authorised and correctly recorded.
- Update the customer account for both items and reconcile the remaining balance.
If both items are supported and correctly dated, the customer's $2,400 balance is cleared by the $2,000 receipt and $400 discount. Verify before posting.
Look for these in your work
- Receipt evidence checked
- Discount authorised
- Ledger updated after verification
Inventory records show 520 units, while a documented count finds 508. Name two checks before an adjustment is posted.
Give me a hint
Check the count process and trace movements near the count date.
Compare my reasoning
- Recount or inspect the count sheets and confirm the units use the same identification and condition rules.
- Check receipts, dispatches and returns around the count date for cut-off or movement errors.
- Only then record a supported adjustment under the applicable inventory procedure.
Confirm the count and its scope, then test receipts and dispatches around the date. Record a justified 12-unit shortage only after those checks; the count difference alone does not identify its cause.
Look for these in your work
- Count reliability assessed
- Cut-off checked
- Adjustment evidence required
A manager says that monthly bank reconciliations guarantee cash has not been stolen. Evaluate the claim and recommend one control alongside reconciliation.
Give me a hint
State what the comparison can detect and what it cannot establish alone.
Compare my reasoning
- A reconciliation can expose unrecorded bank items, posting mistakes and unusual differences.
- It may not reveal collusion, fabricated support or a transaction deliberately recorded in both records.
- Separate payment authorisation from reconciliation and have an independent person review unresolved differences.
The claim is too strong: a bank reconciliation is a useful detective check, not a guarantee against theft. Separate payment approval and recording, and have someone independent review the reconciliation and exceptions.
Look for these in your work
- Benefit identified
- Limitation explained
- Practical control recommended
Common mistakes
- Treating every difference as an error rather than checking timing
- Posting an unsupported adjustment simply to force agreement
- Assuming a reconciliation proves there is no fraud
What can you explain now?
Which evidence is most directly useful to verify a trade payable balance?
Compare with the explanation
The supplier's statement reconciled to the purchases ledger
The supplier statement is an external record that can be compared with the business ledger.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Give one internal record, one external source and one limitation of a reconciliation.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.