When the year-end sales figures do not match between the Trial Balance and the Profit & Loss (P&L) Income Statement, the discrepancies may be due to differences in how data is collected and recorded in each report. Below are the key reasons and steps to verify and resolve these inconsistencies.

1. Credit Notes for Goods Returns Not Reflected in Financial Statements

  • Why This Happens:

    • If there are Credit Notes related to goods returns, they may not be reflected in financial statements for Revenue/Sales of goods and services.
    • The system processes and displays data differently in the Income Statement and Trial Balance, leading to variations.

  • How Data is Collected in These Reports:

    • Income Statement: Captures turnover data from the Accounting Register but does not consider balances.
    • Trial Balance: Gathers data from the same register but includes both turnovers and balances.
    • This means that if a sale occurs and is later returned, the turnover increases, but the financial result does not change.
    • Since the Income Statement focuses on financial results, it may exclude certain transactions that are recorded in the Trial Balance.

 Check for Credit Notes in the system and confirm whether they are properly accounted for in financial reports.

2. Manual Transactions in the General Ledger (GL)

  • Why This Causes Issues:

    • If manual transactions are entered using the Transactions (General Ledger) document instead of standard system documents, they may not be linked to the required registers.
    • This leads to missing data in financial statements, causing differences between reports.

  • Best Practice:

    • Avoid manual transactions for sales operations unless necessary.
    • Always use standard system documents for sales to ensure proper financial reporting.

Verify whether manual transactions were used. If they were, ensure they are correctly linked to registers or replace them with standard system entries.

3. Month-End Closing Not Completed

  • Why This Matters:
    • If month-end closing operations are not completed correctly or contain errors, financial records may be incomplete or inaccurate.
    • This can lead to discrepancies between the Trial Balance and the Income Statement.

Check that all months in the reporting period are properly closed without errors.

4. Detailed Data Comparison and Reconciliation

  • To Identify Discrepancies:

    • Double-click on the amounts in reports to review detailed records.
    • Compare data from both reports to find any missing or misclassified transactions.

  • Recommended Reports for Reconciliation:

    • Income Statement (monthly report) – provides a clear breakdown of revenues and expenses.

    • Trial Balance for accounts (monthly periodicity) – helps track turnovers and balances.

Generate reports monthly for easier reconciliation and review inconsistencies in recorded amounts.

By following the above steps, you can determine the root cause of inconsistencies and ensure that financial reports align correctly.


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