| Bookkeeping is fundamental in running your | | | | reconciliation. |
| business in an informed way. It is important that | | | | Items: The first item of the statement is your |
| you have an organized, transparent and updated | | | | opening balance just before the reconciliation. |
| bookkeeping system in place. One of the ways to | | | | Check each item of the statement further for |
| keep track of your company's books is bank | | | | the following. If the transaction is missing from |
| reconciliation. | | | | you our company's account and it is on the bank's |
| What is bank reconciliation? The procedure of | | | | record then you need to enter it in your books. If |
| comparing the account balance given by the bank | | | | the bank section has missed it then enter it under |
| with that of the company's book of accounts and | | | | their section. If the missing transaction belongs to |
| explaining any discrepancy is bank reconciliation. | | | | the bank such as any fees deductions or interest |
| The discrepancy in the balances may be due to | | | | credits, then it is an error at the bank's end and it |
| the different timing of registering the data in the | | | | will rectify the error. |
| bank's books and in your company's books. This | | | | Adjustments: Once the reasons for the |
| discrepancy is normal and is rectified automatically | | | | discrepancy have been figured out then you |
| within small time. However, sometimes the | | | | should include the missing information in journal |
| discrepancy is due to an error, which has to be | | | | entries. |
| rectified manually and to catch this error you | | | | Items of Bank's Statement Credit: Banks may |
| need bank reconciliation. Companies generally do | | | | credit some interest periodically into your account |
| bank reconciliation at the end of each month. | | | | as applicable on the account balance. |
| Reasons for maintaining bank reconciliation Regular | | | | Debit: These will be any of the bank charges on |
| monthly bank reconciliation keeps your company's | | | | your account as applicable. |
| financial records clear and updated. You never | | | | Erroneous credit: Any incorrectly placed credit in |
| build up an erroneous backlog. Also, you can | | | | your account is booked under this head. |
| understand your accounting status all the time. It | | | | Sometimes, the bank makes a deposit in the |
| is important that you have a prompt and reliable | | | | wrong account. |
| communication system with the bank so that you | | | | Items on Your Account Books Unpresented |
| keep your records accurate. | | | | check: Your Company's books should record any |
| Bank Reconciliation Statement It is better to | | | | checks issue immediately at the time of issue. |
| prepare a bank reconciliation statement by | | | | The bank will, however, record it when the check |
| yourself so that you are able to figure out the | | | | is presented to it. |
| causes of discrepancy. Structure: The statement | | | | Software for bank reconciliation There is a lot of |
| is divided into two sections. The right section | | | | bank reconciliation software readily available in the |
| reflects your bookkeeping for bank transactions | | | | market. This software is compatible with all the |
| and the left side reflects the bank's records for | | | | latest accounting packages. The data is |
| your account with them. | | | | automatically imported, checked and reported |
| Heading: The heading of the statement will have | | | | through the software making your job easier. |
| the bank's complete name with the date of | | | | |