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What is Ledger Scrutiny

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Ledger Scrutiny in easy language means

Checking different ledger (in tally) in detail to find out errors if any

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Steps to be followed

1.Open Ledger (In Tally,do Display--Account Books--->Ledger)

 

2.Check Opening Balance (Whether it is matching with last year Closing Balance Sheet)

Note:-Opening Balance will show only for Ledgers of Different Assets and Liabilities of Balance Sheet and not Profit and Loss A/c

 

3. Check Ledger Group (You can Select Ledger and do Ctrl+Enter in Tally)

Ensure that it is in correct head.You can refer Tally Ledger List  for this

 

4.If it is a Expense Ledger ,

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  • Do F5 Columunar  in Tally (to get amount and taxes in separate column)
  • Check Whether TDS Applicable on it or not
  • TDS Deducted if TDS Applicable
  • If Registered in Vat,Whether Input Vat Credit is available and correctly taken or not
  • Similarly,if company registered in Service tax,whether Input of Service tax or Excise is available and correctly taken or not
  • Match with Last year Profit and Loss A/c,Check whether there is abnormal increase or decrease in expense amount,If yes enquire about reason for the same
  • Ensure that Amount of expense matches with amount of purchase shown in different returns filed like Vat 
  • Check Expense made in Cash whose amount more than 20000(You can do F12 Range)

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5. If it is an Income Ledger

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  • Do F5 Columnar  in Tally (to get amount and taxes in separate column)
  • Check Whether Vat/Service Tax/Excise charged as per Correct Rate
  • Ensure that Amount of Income matches with amount of Sales shown in different returns filed like Vat,Service tax,Excise
  • Match with Last year Profit and Loss A/c,Check whether there is abnormal increase or decrease in Income amount,If yes enquire about reason for the same

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6.If it is an Debtor Ledger

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  • Closing Balance should be a Debit Balance
  • If it is a Credit Balance,it means either Income not booked or Advance Received
  • If Income not booked,book Income by passing Income Entry (Party Dr  To Income)
  • If Advance Given,Change head of Party to Advance from Customer (Current Liability)
  • Do Debtor Aging to find long outstanding debtors and book Provision for Bad Debts
  • Ask for Balance Confirmation or Party Ledgers and do Debtor Reconciilation
  • Check TDS Receivable correctly booked and Match with Form 26AS

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7.If it is an Creditor Ledger

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  • Closing Balance should be a Credit Balance
  • If it is a Debit Balance,it means either Expense not booked or Advance given
  • If Income not booked,book Expense by passing Expense Entry (Expense Dr To Party )
  • If Advance Given,Change head of Party to Loans and Advances Assets /Advance from Supplier (Current Assets)
  • Do Creditor Aging to find long outstanding creditor and Write off Amount
  • Ask for Balance Confirmation or Party Ledgers and do Creditor Reconciilation
  • Check TDS Correctly deducted and Match with TDS Returns

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8 If it is an Fixed Asset Ledger

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  • Check Whether Depreciation Correctly booked as per Companies Act and Income Tax Act
  • Match with Depreciation Chart as per Companies Act and Income Tax Act 
  • Check Current and Deferred Tax Computation
  • Check Calculation of Profit and loss on Sale of Assets
  • Check Fixed Asset Register if prepared to ensure it matches with amount in Tally of Fixed Asset
  • Obtain Written Confirmation for Fixed Assets kept with third party/employees
  • Check whether Input of Vat/Excise on Purchase of Capital goods available and correctly booked

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  1. Accounts and Finance
  2. Step 4 Balance Sheet Finalization Procedure
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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