Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board

c. Reconcile (2): Beginning Trial Balance and Adjusting Journal Entries to the tax
return.
d. Reconcile (3): Beginning Trial Balance to General Ledger.
8. Structure of the General Ledger
The General Ledger (GL) is prepared monthly and is cumulative, summarizing entries made
to each account by the journals. Being computerized, source codes are used to post
summaries of monthly journal entries to the General Ledger accounts. Without a key of the
source codes, one does not know from where an amount originated.
Journal Voucher Entries
The Journal Voucher book contains items which alter the General Ledger to correct errors,
account for standard recurring items and to make tax adjustments.
1. Standard Entries
Items such as Amortization and Prepaid expenses which are periodically being adjusted are
done through Journal Voucher entries.
2. Errors
The correction of errors which posted to the General Ledger, the Journals, or the subsidiary
ledgers are also done through the Journal Voucher.
3. 13th Month Entries
At the end of the taxable year, and prior to the preparation of the Trial Balance, several
entries are made which constitute corrections to previously recorded errors and adjustments
in yearend account balances for federal tax purposes. These 13th month entries generally
address accruals, writedowns, the LIFO reserve and elimination of book reserves to name a
few. These entries are prevalent in the auto industry and are usually identifiable by a unique
source code in the General Ledger.
Sub-Journals
Although dealerships do vary from one another on the complete structure of books and records,
they usually vary along similar lines.
1. Schedules
In addition to the typical books and records, auto dealers also maintain a number of various
subsidiary ledgers that may assist in the examination. Examples of such subsidiaries include:
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