If you are consistent while operating a bank account where you deposit your hard-earned money and then habitually withdraw that money from time to time, you must maintain a proper record. It is important to conduct adequate bookkeeping, in your way, for the number of transactions, deposits, and withdrawals that you make. You may get your bank statement and be surprised to find out that the balance shown is different from what your records show. Now, what can you do in this scenario?
You need to compare the two sets of records thoroughly and find the information recorded in one but not the other. A similar type of situation may also arise in a business that has multiple accounts. Maintaining a proper and authentic record for all accounts is a very big concern for any business. All concerns are addressed by maintaining a record of all banking transactions carried out by the business and are set per the date on which the bank cashbook shows the balance.
If there are any discrepancies, the business can and should be able to find the reasons to reconcile the correct balances. That is the reason why it is essential and necessary to reconcile your bank statements. It is also important to know how to prepare a reconciliation statement known as the bank reconciliation statement.
Reconciling Bank Statements
Reconciling bank statements is important and necessary, as it can further be used to maintain proper bookkeeping or even maintain your accounts. Here are a few steps in which you can reconcile your bank statement.
Writing the balance from your checkbook and the number of the next unused check on the reconciliation form is a good habit. You should then deduct all bank charges from your checkbook and balance the remaining amount to get your adjusted checkbook balance.
Record and maintain the ending balance exactly as it is shown on the bank statement. You can now compare both of the ending deposits listed on the bank statement and the deposits listed on your checkbook. You can also put a checkmark beside the amount on the bank statement and the checkbook. List all deposits that you have and then bring them forward with a checkmark on the reconciliation form. These can then be your outstanding deposits. To reconcile your bank statement, it is necessary to place every item carefully to avoid double counting properly.
What you have entered from your checkbook must also match the items from your bank statement. Some of these items would not have been added from your bank. In the end, you can total all of the outstanding deposits to the bank statement balance.
Proceeding towards the end of Reconciling Bank Statements
You can now compare the deposits listed on the bank statement with the deposits listed on your checkbook. It is important to keep putting a checkmark beside the bank statement’s amount and on the checkbook to know for sure that you have not missed any item or amount. List all deposits that you do not have a checkmark on the reconciliation form for. These would be called your outstanding deposits. This further means that you have entered them in your checkbook, but the bank has not yet added them to your account. You can add the total of your outstanding deposits to the bank statement balance.
Moving towards the final steps of reconciling a bank statement, you can now arrange all canceled checks in numerical order and then compare the canceled checks with those listed on the statement and the checkbook. Put a checkmark beside the amount on the bank statement and the checkbook as well. Hence, while you are reconciling your bank statement amount, you might want to list all check numbers without the checkmark. These are outstanding checks that you have written, but the bank has yet to receive them, which means they have not been paid.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.