Bank Reconcilliation
Contents
Overview
What is bank reconciliation?
Information for a bank Reconciliation
Perform a bank reconciliation
Check for Differences
Overview
A bank reconciliation is a process of comparing a company's bank statement to its own records of transactions to make sure that they match and to identify any differences.
This helps to ensure that the company's books accurately reflect its current financial position, including its cash balance. It's easier to complete a bank reconciliation on a regular basis as it's easier to find any differences.
What is bank reconciliation?
What is bank reconciliation?
The process involves identifying any differences between the bank statement and the company's records and explaining these differences, such as outstanding checks, bank errors, or unauthorised transactions.
By reconciling the bank statement, the company can correct any inaccuracies and maintain accurate records of its financial transactions.
Information for a bank Reconciliation
Information for a bank reconciliation
To perform a bank reconciliation, you will need the following:
Bank statement: Obtain the most recent bank statement from the financial institution, including all transactions that have taken place during the period being reconciled.
Company records: Review your own records of transactions, including deposit slips, checks, and any other relevant documentation.
Reconciliation software: Consider using software designed for bank reconciliation, which can automate much of the process and help to ensure accuracy.
Calculator: You will need to perform mathematical calculations, so have a calculator handy.
Pen and paper: You may find it helpful to have a pen and paper to make notes and keep track of any differences that need to be reconciled.
By having all of this information and tools available, you can perform a thorough and accurate bank reconciliation that helps you to identify any discrepancies and keep your company's financial records up-to-date.
Perform a bank reconciliation
Perform a bank reconciliation
To perform a bank reconciliation, you can follow these steps:
Gather all necessary information: Obtain the most recent bank statement and your own records of transactions, including deposit slips, checks, and other relevant documentation.
Compare the records: Start by comparing the bank statement with your own records of transactions to identify any differences. This includes checking for outstanding checks, deposits in transit, and bank errors.
Explain the differences: Next, explain any differences that you have identified. For example, if there is a check on the bank statement that is not recorded in your own records, you should identify it and make a note of it.
Update your records: Make any necessary adjustments to your records to ensure that they accurately reflect the current cash balance.
Make corrections: If there are errors in the bank statement, such as a mis-posted transaction, contact the bank to request that the error be corrected.
Record the reconciliation: Once you have reconciled the bank statement, it is important to record the reconciliation in a formal manner, such as in a spreadsheet or ledger, to maintain a record of the reconciliation process.
Repeat the process regularly: Perform a bank reconciliation regularly, such as monthly or quarterly, to ensure that your records are accurate and up-to-date.
By following these steps, you can perform a thorough and accurate bank reconciliation that helps you to identify any discrepancies and maintain accurate records of your company's financial transactions.
Check for Differences
Check for Differences
To check for differences in a bank reconciliation, you can follow these steps:|
Review the records: Start by reviewing both the bank statement and your own records of transactions, including deposit slips, checks, and other relevant documentation.
Identify discrepancies: Look for any differences between the bank statement and your own records. This could include outstanding checks, deposits in transit, and bank errors.
Calculate the balance: Calculate the balance according to both the bank statement and your own records. If the balances do not match, it is likely that there is a discrepancy that needs to be explained.
Check for any errors: Look for any errors in the bank statement, such as mis-posted transactions or incorrect amounts. If you find any errors, contact the bank to request that they be corrected.
Compare transactions: Compare the transactions listed on the bank statement with those listed in your own records. Check for any transactions that are missing from either the bank statement or your own records.
Explain the discrepancies: Once you have identified any discrepancies, make a note of them and explain what has caused the difference. This could include outstanding checks, deposits in transit, or bank errors.
By following these steps, you can check for differences in a bank reconciliation and identify any discrepancies that need to be explained. This helps to ensure that your company's financial records are accurate and up-to-date.