A bank reconciliation can help you manage your cash balance.The process of reconciliation compares the cash activity in your accounting records to the transactions on your bank statement.You can monitor all of the cash in and out of your bank account with this process.You can identify fraud and unauthorized cash transactions with the reconciliation process.It is important that you reconcile your bank account within a few days of receiving your statement.
Step 1: Take a look at the bank statement balance.
As soon as possible, you should be able to access your bank statement.The bank statement should be available after the last day of the month if you have online access.The month-end balance should be noted when you get the statement.The goal is to reconcile the bank balance and cash account records.You have to check whether the transactions appear in your records and on your bank statement.In a bank statement, credits and debits refer to deposits and withdrawals from the bank account.The accounting profession uses these terms differently.If there is only one place where the item appears, it is a reconciliation item.If you can identify the reason the two records don't match, you will be able to correct them.A bank reconciliation is a formula.The formula is (Cash account balance per your records) plus or minus (reconciling items)Your bank reconciliation is complete when you have this formula in balance.The book balance or balance per book is what your cash account balance is.The balance per bank is the bank statement balance.There is a difference between the two balances.
Step 2: The bank balance should be increased for deposits that have not been posted.
Between the time you deposit at the bank and when the deposit is posted to your bank account, there may be a delay.The delay may be brief if you deposit funds at an ATM or the bank branch.The delay can be longer if you mail a deposit.The amount of the deposit is increased in your cash account.You have a reconciled item because of the bank's delay in posting the deposit.The true amount of cash would need to be reflected in the bank statement balance.Assume your bank balance is $5,000.You deposited money on July 31st.The deposit is not included in your July bank statement.If you wanted to reconcile the balance, you would have to increase the bank balance to $6,500.The item is a reconciliation.
Step 3: The bank balance should be decreased for all outstanding checks.
A cleared check is a check that has been posted to the bank's records.An outstanding check is a check that has not been cleared by the bank.The situation occurs when checks are written late in the month.The bank balance needs to be deducted from the outstanding checks.The bank balance should be $5,000.You can increase the bank balance to account for transit deposits.The bank balance is adjusted to $5,000 by your change.At the end of the month, 5 checks worth $3,000 are still outstanding.The adjusted bank balance is decreased by $3,000 to account for outstanding checks.Your adjusted bank balance is $3,500.Check the prior month's statement to make sure that any outstanding checks from the previous period have been cleared this month.To find out why a check hasn't cleared, contact the person who should receive the payment.The check may be lost if it is still outstanding after a month.
Step 4: Check the bank's processing department for errors.
Your accounting is posted to the general ledger when you reconcile a business cash account.The cash account's general ledger should be compared to the bank statement activity.You can't fully explain a transaction.Contact your bank if you're not sure about a transaction.Transposing, or reversing the numbers on a deposit amount or check, is a possible error.A $750 deposit may be recorded as a $570 deposit by the bank.This results in an error that is a multiple of nine.To remove the reconciling item, contact your bank and ask them to make a correction.The discrepancy may be fraudulent if it isn't a bank error.A dental office is managed by a secretary.The front desk has a checkbook on it.A visitor cashes a check that has been stolen.A fraudulent transaction happens when the check goes to the bank account.The dentist might notice the check in the bank statement.The bank adds funds to the account after the dentist calls.The reconciling item was removed.
Step 5: All checks have been posted.
All of the checks written and deposits made during the month should be listed in a report when your company receives the bank statement.Accounting software can provide reports for a company.You should review your check register and deposit slips when you reconcile your bank account.The check register and deposit slips should be reviewed by the company.All of the checks were written in chronological order.The check should be in your bank statement.Attach the check to your records if it cleared your bank.The cleared check can be documented using accounting software or a manual report.Checks written in the previous month should be reviewed.If the checks are posted to the current month's bank statement, review.Attach that fact to your records if the check cleared.Contact the payee if the check isn't cleared.The check might be lost.You should create a list of the checks that haven't been posted to the bank account when you finish your review.The list should include the check number, dollar amount and payee.Your outstanding checks are represented by the total dollar amount.A reconciling item is outstanding checks.
Step 6: All deposits have been uploaded.
A list of all deposits should be printed by the business.All deposits should be reviewed by the company.If you want to reconcile your personal account, you should have a list of your deposits in your checkbook.Review the deposits that were posted to the bank's records when you receive your bank statement.You can review your checkbook deposits by date.The bank statement has each deposit posted to it.Deposits in transit should be reviewed at the end of the month.The deposits were posted to the bank statement.You should create a list of all the deposits that have not been posted to the bank account.The deposit amount should be included in the list.Your transit deposits for the month are the total dollar amount.There are deposits in transit.
Step 7: Service charges and automated debits should be subtracted.
You have to deduct bank charges from your cash account.A monthly service charge is a type of bank charge.If you overdraw your account balance, you may be charged.Most of these charges are posted to your bank statement, but you may not see them in your cash account at the end of the month.The interest earned on your bank account balance needs to be adjusted as well.If a $10 service fee is posted to the bank statement, it will need to be deducted from the cash account.It's a reconciling item if you don't post the amount to your cash records.You can add interest to your account balance.You don't usually know about the interest on your account until the bank statement arrives.The bank will credit your cash account balance with interest.The amount is a reconciling item if you don't post the interest.Automatic payments should beducted.Automatic monthly payments may be set up for certain recurring bills.If you don't have a payment date on your calendar, you may not see the withdrawal until your bank statement shows it.Take a look at your bank statement.You can post missing automated payments to your cash account.The reconciling item will be removed by this step.Any checks with the word "snF" in them should be deducted.If the bank statement shows that a check bounced during the month, that means that the amount was not deposited to your account.You have to deduct the check amount from your cash account.If the bank charges you a fee for depositing a bad check, you need to deduct that amount.If you overdraw your account, you will be charged.
Step 8: Make sure to check for any errors during the month.
Errors may be found when you compare your cash account activity to the bank.You might post the wrong amount for a check or deposit on your cash records.The reconciling item will be created by those errors.If your balance is off by a multiple of nine, you may have made a transposition error.You accidentally switched the order of the two digits in the deposit.You may have filled out a check for $310 but recorded it as $130 in your records.The balance per the bank statement should be equal to the cash account balance once you finish your reconciliation work.Review your work until you account for all of the reconciled items.