Guides
Part of A balance sheet is a single date, not a period, and that changes everything
Trial-account tests for the schedules behind a balance sheet
Seven trial-account tests show whether software can hold the schedules behind a balance sheet, plus three control tests: period lock, comparatives, export.
A balance sheet is only as good as the schedules behind its totals: the open invoices, the prepayment, the loan, the asset list. If the tool cannot hold them, you will hold them in a spreadsheet for as long as you use it.
Each of the seven schedule tests takes a few minutes on a trial account. The amounts are made-up test entries, so you can run the same tests on any package without preparing real data.
What to take away
- A balance sheet tool is judged by its reconciliation features, not by how the report looks. Anything can print a balanced statement.
- The tests that matter are the ones about supporting schedules: stock, assets, prepayments, loans, and the accounts nobody feeds automatically.
- If a package cannot show you the list of items behind a total, that total is a number you will be defending from a spreadsheet.
Receivables: can you see what sits behind the total?
Start with the biggest customer-facing balance. Open the receivables figure on the balance sheet and click through to the list of open invoices behind it. Then try to break the link between that figure and its list.
Good answer on the drill-down: the list appears, totals to the balance, and each line opens the document. A balance sheet that is a printed report with nothing behind it turns every question about a balance into an export and a spreadsheet.
Next, try to post a manual journal directly to the receivables control account, bypassing the customer ledger. Good answer: it refuses, or it warns and records who did it. This is the single entry that breaks the agreement between a control account and its ledger.
Prepayments and loans: do the schedules run themselves?
Enter an annual cost of 2,400 paid in one month and ask the system to spread it at 200 a month. A good answer is a schedule you can list, showing what is left and when it ends, that posts each month automatically and can be stopped.
A tool that cannot do this leaves you making twelve manual journals a year, or not making them. Loans fail the same way, which is why loans that never shrink are such a common error.
For the loan, enter a repayment of 2,000 and split it into 1,880 against the loan and 120 to interest. A good answer makes the split easy. Better still, the schedule can be held so the split is proposed each month. Check that the loan balance appears on the balance sheet and moves.
The cost side of that distinction is covered in the guide to expense recording.
Assets and stock: is there something to agree the balance to?
Add an item costing 3,000, with a date and a description, and produce a list of every asset held. Good answer: a register that totals to the balance sheet figure, handles a disposal and carries whatever periodic charge your policy sets.
What that policy should be is a question for an accountant. A tool that hard-codes an answer without letting you change it is telling you something.
Then record a stock figure from a count and post the difference. Good answer: the adjustment goes to cost of sales in the period of the count, the balance sheet stock figure changes, and the entry is visible as an adjustment rather than buried. The month it lands in should show the effect plainly.
Tax control: does the balance tie to a period?
Produce the balance of any account holding money collected on behalf of an authority, such as sales tax collected for a state or payroll tax withheld for the IRS. List the transactions behind it for a chosen period.
Good answer: a report that ties the balance to a period, so it can be compared with what was filed.
Which taxes a business pays follows from how it is set up. The SBA says that business structure and location influence which taxes your business has to pay. If this reconciliation needs a spreadsheet, it will not get done.
Line the seven up
The table sets each test beside the invented entry and the schedule the tool should be able to produce. Run them in this order on one trial and note which rows needed a spreadsheet.
| Test | Invented entry | Schedule the tool should show |
|---|---|---|
| Drill-down | Open the receivables total | Open invoices that add up to the balance |
| Control account | A manual journal to the control account | A refusal, or a warning that names the user |
| Prepayment | 2,400 spread at 200 a month | What is left and when it ends |
| Loan split | 2,000 as 1,880 and 120 | A loan balance that moves |
| Asset register | An item costing 3,000 | A list that totals to the asset figure |
| Stock count | A counted figure and its difference | A visible adjustment in cost of sales |
| Tax control | A chosen period | A balance tied to that period |
Small business packages tend to fail the asset register and the tax control rows. Many owners handle those two accounts in a spreadsheet.
Keep a note of every row that needed a spreadsheet during the trial. A package that sends two or three schedules back to a spreadsheet is telling you where the work will fall once you are paying for it, and that is worth weighing against the price difference.
Period lock, comparatives and export
Three control tests complete the ten in the figure below. They ask whether issued numbers stay fixed and whether you can leave, and the accounting software checklist treats them as contract commitments.
Period lock: mark a month as closed, then try to date an invoice into it. Good answer: refused outright, or allowed only by a named user with the change logged. If a closed month can be altered silently, every statement you have issued is provisional forever.
Comparatives: ask for the balance sheet at this month end beside the same date last year. Good answer: both columns, from the same account structure, with the movement. A reorganized chart of accounts can break that comparison, so settle the structure early.
Export: take out the trial balance, every ledger, the asset register, the prepayment schedule and the attached documents. Good answer: files you can open and use elsewhere, including the document images. Run it on the trial, before any data of yours sits in the package.
Ten tests for balance sheet tools
- Drill from a total to its items
- Post a journal to a control account
- Close a period, then change it
- Hold a prepayment schedule
- Split a loan into interest and capital
- Keep an asset register
- Adjust stock
- Control tax
The export test decides how expensive changing your mind is. It matters longer than the software relationship, because the underlying records must stay available. The IRS notes that creditors may require you to keep records longer than it does.
The reconciliation routine in the bookkeeping foundations guide is what actually produces a trustworthy statement. The tool only has to stop getting in the way.
Common questions
How long do the tests take?
An afternoon per package on a trial account, less once you have done it twice. Set up the same invented data each time so the comparison is real.
Which test do most packages fail?
The asset register and the tax control reconciliation, in small business packages. Both are handled by many owners in a spreadsheet, and both are the accounts most likely to be wrong.
Is a package that fails a test unusable?
Not necessarily. It means you have found the work that will fall to you or your accountant. Decide whether that work is worth the price difference, with your eyes open rather than after a year.
