So was the plaintive cry of one of my co-workers who couldn’t get her Balance Sheet to balance. Madness, I know.. the very structure of a Balance Sheet means that it will balance. For several centuries now the core premise of accounting is the double-entry system — for every debit there must be a credit. In prior generations when bookkeeping was done on paper ledgers it was possible to miss either the DR or the CR. But in today’s new-fangled computerised accounting systems a journal entry will not post unless it balances.
My co-worker was entering her financial statements into our monthly reporting package. We report in 1000’s so there could be some rounding differences here or there, which can easily be handled. She was off by a freaking $10K on her retained earnings. She asked me if she adjusts her Net Income for that $10K, would that work.
I had to patiently explain to her that there is no difference between the concept of “Income Statement” and “P&L” – they are both the same thing.
She finally figured out, after much coaching on my part for the past 2 days, that her discrepancy isn’t in Retained Earnings, but in her reported Fixed Asset numbers.
The concept of “tick & bob” goes right over her head.