Plug – the ugly word

Posted by edieg@att.net on March 18, 2016 in W.H.Y.L.D. What Have You Learned, Dorothy |

Some accountants love the word “plug.” I cannot stand the word or action of plugging. Have you ever been unable to reconcile your bank statement where the difference is pretty small? Are you tempted to just call it a rounding error? When I teach Quickbooks or Quicken, I strongly encourage people to not just make a rounding adjustment for the difference. There is something wrong with your numbers, and it most likely is not as easy as it sounds. Let’s say your books say you are off by $50 where your bank says you actually have $50 less than your records show. When you get into the details, you might find that there are many more errors than the $50. The net result might or might not be $50. I recently had an experience where I was told to just plug a figure. Too much time was being spent reviewing the discrepancy, and the adjustment wasn’t material. However, I knew that plugging this figure would throw off all of the other numbers, and I would probably have to deal with that adjustment on more than just that year’s tax return. As it turns out, once I delved into the details, there were many adjustments that needed to be made. Mystery was solved, and the books were again accurate. Do not plug. Differences need further exploration.

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