Bank Reconciliation: How To Reconstruct A Bank Statement
According to the bookkeepers, the bank reconciliation part is the toughest part among the entire process. Some bookkeepers find bank reconciliation as a very interesting job., but there are those who find it very 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.
Knowing the concept of 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 keep in mind that the discrepancy in the balances may be due to the diverse timing of registering the information in the books and in your firm’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 a single mistake, which has to be rectified on hand and to catch this mistake, you need bank reconciliation. The firms generally do the bank reconciliation at the end of the month.
Reasons for maintaining bank reconciliation
Every time you do monthly bank reconciliation, the records of the company will be clear and up to date. As a result, back log would be eliminated. Furthermore, you can comprehend your accounting status all the time. It is incredibly important that you have solid and reliable communication and collaboration power with the financial 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. Outstanding or debit 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 the missing information, and the knowledge and skills of the person executing reconciliation. In such instances, the bank statements should be reconstructed.
There are several pages behind the size and extent of the corporation concerned. If in any case, one page is missing, the reconciliation 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 company, you need to take care of the money transaction behind the principle of bank reconciliation.
Bookkeeping is fundamental in operating your business in an informed way. 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.