What is a Bank Reconciliation?
Just about everyone engages in some form of bank reconciliation. From households to big business, bank reconciliation is a part of sound financial management. Essentially, bank reconciliation is the act of taking documentation issued by the bank and comparing it to documents that are generated by the account holder, and making sure the two sets are in harmony with one another. Here are some tips on how to deal with bank reconciliations quickly and effectively. For both companies and households, the task of reconciliation with the bank usually involves comparing the line items on a checking account bank statement and the entries in a checkbook register that relate to the same time period. Among the important line items to verify are check numbers and the amounts associated with each check number. This can often lead to discovering any small discrepancy between the account balance shown by the bank and the balance reflected in the checkbook. Along with the check information, it is also i
To make sure that all transactions in your business have been correctly accounted for, you will need to reconcile the position as shown by your cash book records with that shown by your bank’s records. This process is known as a “bank reconciliation”. The purpose of the bank reconciliation is to reconcile the balance showing in your books with those shown in the bank’s books where it relates to all transactions that have gone through the bank accounts. 2 Main Reasons for Differences in the Reconciliation Two main reasons for any difference in the positions are: • Unpresented checks: These are checks which you had written out in your business and entered into your books as having been paid, but they were not yet showing in your bank’s records via the bank statement. This would come about because it sometimes takes a few days for the checks to be presented by the people you pay and then for those checks to be shown up as a charge against your bank account. • Deposits not credited: These
A bank reconciliation is a process performed by a company to ensure that the company’s records (check register, general ledger account, balance sheet, etc.) are correct and that the bank’s records are also correct. The bank reconciliation for a company’s checking account begins with the company noting the balance per the bank statement and then making some notations about that balance. For example, the balance on the bank statement is probably not the amount that appears in the company’s records. In all likelihood the checks written by the company in the days immediately before the date of the bank statement will not have cleared (been deducted from) the checking account. These are called outstanding checks. Another possibility is that the company received money on the closing date of the bank statement and properly recorded the amount in its records. However, the money was deposited into the bank too late in the day and will appear on the next bank statement. This is known as a deposi
