Bank reconciliation refers to a process of bookkeeping which is used by an accountant to discover why the balance in the company's books and a depository service statement is different. The difference needs to be sorted out as soon as it has been identified. Bank reconciliation is used to first find the erroneous entries and secondly to rectify the errors.
If a check or even a number of cheques are issued by the company and not as yet presented at the depository service, then differences may appear in the company's account and that of the depository service. Reconciling the difference is not as straightforward as it seems. Often times, it becomes necessary to go through all transactions to find out just where the discrepancy occurs. Once the problem is identified, it must then be fixed.
To reconcile the error, it is often necessary to adjust the erroneous accounts. It is possible to do this with minimum fuss by regularly reconciling the accounts. Good accounting software should be used to find as well as remove the errors. The right software can check all the general ledger accounts and locate the records which do not have a matching reverse entry.
Every time that a company and depository service enters a transaction, a record of the transaction has to be created. When the month ends, the depository service will send the company a depository service statement. The statement holds all the records concerning every activity entered with the depository service by the company.
Use of automated software helps to accomplish the task in a safe and automated manner. All that is required is to download activity from the depository service and save it in a file. By importing two different data sets, the software will then perform automatic matching of transactions and help you reconcile the accounts.
The company, when it receives the depository service statement, will have to verify the entries listed in the depository service statement and check them against their own records. If there is a missing entry, the company needs to undertake the bank reconciliation process. This process is beneficial to the company as it is the best means of finding out the sum of money that the organization has. It also helps to find out whether this amount tallies with what the balance standing in the statement.
If a check or even a number of cheques are issued by the company and not as yet presented at the depository service, then differences may appear in the company's account and that of the depository service. Reconciling the difference is not as straightforward as it seems. Often times, it becomes necessary to go through all transactions to find out just where the discrepancy occurs. Once the problem is identified, it must then be fixed.
To reconcile the error, it is often necessary to adjust the erroneous accounts. It is possible to do this with minimum fuss by regularly reconciling the accounts. Good accounting software should be used to find as well as remove the errors. The right software can check all the general ledger accounts and locate the records which do not have a matching reverse entry.
Every time that a company and depository service enters a transaction, a record of the transaction has to be created. When the month ends, the depository service will send the company a depository service statement. The statement holds all the records concerning every activity entered with the depository service by the company.
Use of automated software helps to accomplish the task in a safe and automated manner. All that is required is to download activity from the depository service and save it in a file. By importing two different data sets, the software will then perform automatic matching of transactions and help you reconcile the accounts.
The company, when it receives the depository service statement, will have to verify the entries listed in the depository service statement and check them against their own records. If there is a missing entry, the company needs to undertake the bank reconciliation process. This process is beneficial to the company as it is the best means of finding out the sum of money that the organization has. It also helps to find out whether this amount tallies with what the balance standing in the statement.
About the Author:
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