Bank Reconciliation: How To Reconstruct A Bank Statement
Bank reconciliation can be the toughest part for 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. As you can see, even the checks that has been processed late.
What is bank reconciliation?
The process of comparing and contrasting the account balance provided by your bank with that of the company’s book of accounts as well as giving details of any discrepancy is the bank reconciliation. There may be differences, and this is due to the differences brought by the timing of registering in your book and the registering of information. Such discrepancy is a normal or typical situation and is rectified automatically within the small time. However, most frequently the discrepancy is due to an mistake, which has to be manually rectified 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 need
First of all, maintaining a bank reconciliation every month will keep your company’s financial records updated and clear. As a result, back log would be eliminated. 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 fundamental process in checking the balance on every bank statement on a specified date with the balance in your book. Bank charges are an additional to the cashbook payments, deducted outstanding checks, and excellent deposits are added. Debit or outstanding orders are additional to the payments.
A lot of people have a hold on bank reconciliation to some extent. There is a certain situation that the bank reconciliation cannot be balanced. And this could be due to 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. If in any case, one page is missing, the reconciliation will not balance. Transactions on the missing page influences on the result of the bank reconciliation apparently.
If you wish to get most of your firm, you need to take care of the financial transaction.
Bookkeeping is the basic in working your business in an efficient manner. It is very much important that you have an organized, transparent and most up to date system in place. Without a doubt, one of the best ways to keep track your records is the bank reconciliation.