Bank Reconciliation

The process of matching all bank statement entries with company records which included deposit, withdrawal, charges and other miscellaneous entries.

Complete Process of Bank Reconciliation

It is a process in which you match the information of your bank statement with cash account balance entity’s accounting records. This process helps in differentiating if any appropriate changes are made in the accounting records. To ensure correct cash records, the user should complete bank reconciliation at regular intervals of time. The mechanism is designed and used to keep good control over payment of cash and receipts. If you find any residual fraud, we suggest you to terminate your account and start a new one.

It is recommended to process bank reconciliation in regular interval for all the accounts in your name in order to make sure that the cash transaction and available with the company is recorded correctly. This also helps to avoid unfavorable scenarios like low cash balance that can result in bounced checks and overdrafted fees. This all can be averted by going forward with bank reconciliation, especially at the time of large and imperative transactions. Bank reconciliation also helps in keeping check on frauds and structuring authentic reports regarding payment or receipt of cash.

How to Process Bank Reconciliation?

Before following the steps detailed below to successfully start the procedure of bank reconciliation it is imperative for you to remember that it is already assumed you are employing an accounting application package. The steps are:

  • Type in the mode details of the reconciliation program. This will show a complete list of all the checks that are not cleared along with uncleared deposits.
  • Mark the check displayed under bank reconciliation system uncheck as they have been cleared from the bank.
  • Mark the deposits displayed under bank reconciliation system uncheck as they have been cleared from the bank.
  • Type in the details of the bank charges under expenses category that are shown on the bank statement and are not displayed under the company records.
  • Provide the closing bank balance detail on the bank statement. Under the scenario that both book as well as bank balance are in tandem, then you can proceed with posting of the transactions and closing the module. However, if the balances in both bank and books do not match then try to look for below listed details:
    • Different transaction amount recorded for same checks under bank and company books.
    • Different transaction amount recorded for same deposits under bank and company books.
    • Checks that are present in the bank records but are missing from the company books.
    • Deposits that are present in the bank records but are missing from the company books.

 

Before closing the bank reconciliation process you must ensure that both the company record closing balance is matching with that of the bank statement closing balance.

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