Understanding Bank Reconciliation
According to the bookkeepers, the bank reconciliation part is the toughest part among the entire process. The opinion of every bookkeeper is very different because some find it interesting, while others is boring. Irrespective of the opinions, it is one of the most fundamental operations of accounting which should be done. As you can see, even the checks that has been processed late.
Defining bank reconciliation
The bank reconciliation is the process of accounts and giving enough details to the discrepancies. 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 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. The corporation do the bank reconciliation every end of the month.
Why bank reconciliation is a need
When you do monthly bank reconciliation, it keeps your company’s financial records updated and apparent. 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. 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 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 extent and size of the entity concerned, every bank statement for a particular period could include of several pages. One missing page will not balance. Transactions on the missing page impacts on the result of the bank reconciliation clearly.
If you want to get the most of your firm, you need to take care of your financial transaction behind the principle of bank reconciliation.
Bookkeeping is fundamental in operating your business in an informed way. It is very important that you have a transparent, organized and updated bookkeeping system in place.