You may find yourself using subaccounts in your accounting – for an example, all goods coming to stock are first accounted for using a specific account still under inventories and there’s the opposing entry that’s also under inventories decreasing inventories at the same time. You’d use this entry until you haven’t yet received the invoice, the invoice is being confirmed or you’re checking the quality etc. and don’t want to show the purchase as a part of your inventory yet. 

The reasons may vary and depend a lot on your business, but matter of fact we want to point out is that those subaccounts that you have decided to use, should always at period end reach 0 balance. If there is something left there, depending on the nature, it should be either very minimal amount or little effect to the statements or there should be very clear reasons as to why it’s not zero.

Subaccounts are used for processes and no doubt are sensible methods to make sure transactions are accounted for initially in the first place (so that they wont get “lost” somewhere), but as such, they should be always finalized and there shouldn’t be an increasing balance of unprocessed transactions on some subaccount. This means you either have an asset or liability missing from your actual balance sheet, which is not okay at all.

Always make sure your subaccounts are either zero or close to zero at period end. If there is a balance, always make sure you know exactly of what it comprises.