How To Do a Bank Reconciliation in 5 Easy Steps

Reconcile button Check that the Out of Balance field reports $0.00, then click the Reconcile button to record the reconciliation. This opens a new window where you are advised that your account reconciles. Pop-up window Reconcile button To complete the bank reconciliation process, click the Reconcile button in the pop-up window. If you look at the Reconcile Accounts window, you will notice that the transactions you selected as reconciled in step 4 have been removed from this list. Preparing a bank reconciliation statement on a periodic basis is an important cash control procedure. It serves to verify the balance of cash shown in the general ledger against the balance shown on the bank statement. Those two balances are rarely equal owing to differences in timing in recording transactions.

The statement outlines the deposits, withdrawals, and other activities affecting a bank account for a specific period. A bank reconciliation statement is a useful financial internal control tool used to thwart fraud. Business owners use bank reconciliations to verify why business checks were not cashed by the intended recipient. Checks can get lost in the mail or be misplaced by the recipient and interfere with a company’s cash flow.

Part 1 of 2:Adjusting the Bank Statement Balance

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Such a difference needs to be adjusted in your cash book before preparing the bank reconciliation statement. In addition to ensuring correct cash records, the bank reconciliation preparing bank reconciliation process also helps in keeping track of the occurrence of any form of fraud. Such insights would help you as a business to control cash receipts and payments in a better way.

Timing Differences in Recording of Transactions

Large numbers of un-cashed checks can indicate a business owner or vendor or supplier is sloppy in maintaining his company’s accounting information. Avoiding this is one of the main uses of bank reconciliation statements. Below the ending balance per the bank statement, create a detailed list of deposits in transit – a deposit that was made but not yet recorded by the bank. Include in your list the date the deposit was made, from whom the check was received and the method of deposit.

• If the cheque cleared data in your books is different from the actual cleared date, especially in case of post-dated cheques, then it’s same as losing your mobile phone in a crowded place.
• If you wish to view the details of a particular transaction in the list, click the zoom arrow next to that transaction.
• You’ll need to figure out if it was a sale, interest, a refund, or something else.
• If you do your bookkeeping yourself, you should be prepared to reconcile your bank statements at regular intervals .
• If so, access the check image posted on the bank’s website to verify who issued the check and the amount of it.
• You can view your bank activity online, or ask a bank clerk for a printout of activity during the time period you are reconciling.

Additionally, the bank reconciliation can highlight any errors recorded in either the company’s accounts or in the bank statements. This topic explains where and how a bank reconciliation is prepared in your MYOB software. Therefore, the bank reconciliation process should be carried out at regular intervals for all of your bank accounts. This is because reconciling the cash book with the passbook at regular intervals ensures that your business’s cash records are correct. In the absence of proper bank reconciliation, the cash balances in your bank accounts could be much lower than the expected level. Your reconciliation period must always start from the last time the account was reconciled or opened if it has never been reconciled. Reconciling bank balances monthly is an important internal control over cash.