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. Irrespective of the opinions, it is one of the most fundamental operations of accounting which should 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 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. 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
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. Moreover, you will understand 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. Charges at the bank are an additional to the deducted outstanding and amazing deposits. 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 the missing information, and the knowledge and skills of the person executing reconciliation. In such circumstances, the bank statements should always 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 firm, you need to take care of your financial transaction behind the principle of bank reconciliation.
Bookkeeping is basic in working your business in an efficient manner. It is very important that you have a transparent, organized and updated bookkeeping system in place. The bank reconciliation is the greatest ways in tracking your records.