Practical and Helpful Tips: Services

Understanding Bank Reconciliation

Bank reconciliation has become the toughest part for the world of bookkeeping. The opinion of every bookkeeper is very different because some find it interesting, while others is boring. Whatever way we look at it, it is one of the fundamental functions of accounting which must be done. Checks which are processed very late can be bounced, if there is a sufficient stipulation for it has not been done in the business books.

What is bank reconciliation?
The procedure of comparing and contrasting the account balance provided by the bank with that of the firm’s book of accounts as well as explaining any discrepancy is the bank reconciliation. You should consider that the discrepancy in the balance may be due to the timing brought differently in registering the information in the books and in your company’s books. Such discrepancy is a typical situation and is rectified automatically within the small time. However, most frequently the discrepancy is due to a single mistake, which has to be rectified on hand and to catch this mistake, you need bank reconciliation. Every end of the month, all corporations do the bank reconciliation.

Why bank reconciliation is a must
First of all, maintaining a bank reconciliation every month will keep your company’s financial records updated and clear. Back log would be eliminated if you follow the rules of bank reconciliation. Furthermore, you can comprehend your accounting status all the time. It is very important that you have quick and solid communication system with the monetary system. The bank reconciliation is the basic process in checking the balance on every bank statement on a given date with the account balance in your cash book. Charges at the bank are an additional to the deducted outstanding and amazing deposits. Debit or outstanding orders are additional to the payments.

Too many people in this world have hold a bank reconciliation at some point. There is a certain situation that the bank reconciliation cannot be balanced. And this could be due to some missing information, than the skills and knowledge of the person carrying out reconciliation. In such circumstances, the bank statements should always be reconstructed.

Depending on the size and extent of the entity concerned, a bank statement for a specific period could consist of several pages. One missing page will not balance. Transactions on the missing page impacts on the result of the bank reconciliation noticeably.
If you wish to get most of your firm, you need to take care of the financial transaction.

Bookkeeping is fundamental in operating your business in an informed way. It is incredibly important to have a transparent and honest transaction all the time. Without a doubt, one of the best ways to keep track your records is the bank reconciliation.