Q. Normally the Net Income amount on my Profit & Loss Statement always matches the Balance Sheet of my monthly financial statement. Unfortunately, they don't match this month. How can I find out why this happened and resolve the problem?
A. There are several issues can be causing the mismatch. I suggest you try the following steps to fix the problem:
1. Verify that the Trial Balance (Summary) is in Balance -- Print the Summary Trial Balance to make sure it is in balance. You may run "Recalculate Account Balances" to refresh the GL Period Account Balance file if it is out of balance.
2. Verify that the Balance Sheet Statement is in Balance -- Compare Total Assets with Total Liabilities and Equity to make sure it is in balance. If the answer is yes, then we can trust the Net Income amount on the Balance Sheet.
3. Carefully Review the Profit & Loss Statement:
- New Expenses or Revenue Account were not incorporated into the Statement Layout File -- This is the most likely cause for a mismatched balance. You should compare the P&L and Trial Balance amounts account by account to find out if any are missing.
- If P&L Net Income is Greater than Balance Sheet -- Chances are that an Expense account is missing from the P&L Layout file.
- If P&L Net Income is Less than Balance Sheet -- Chances are that a Revenue account is missing from the P&L, or that an Expense account is duplicated in the P&L Layout file.
- Modify Statement Layout File -- Add any new missing account information to the P&L Statement Layout file, then rerun the Financial Statement.