Bank Reconciliation

1. Bank Reconciliation

2. What is bank reconciliation? A process that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible differences.

3. Why do these differences happen? When the bank's records differ from the company's banking records, there are certain reasons that the differences occur. ~Bounced check ~Insufficient funds ~Overdraft

4. What are the steps to reconcile a bank statement? Add Deposits Bank Errors Outstanding Checks Check Resister Reconciliation Interest Earned Check Resister Error Compare Both Statements

5. Cash Balances Look at ending balances for both the bank statement and your current checking ledger.

6. Add Deposits Add any deposits that are being transferred to the ending balance. Deposits that are being transferred are deposits that you have recorded in your register but have not appeared on the bank statement.

7. Bank Errors Add or deduct any bank errors to the ending balance. Examples would be incorrect deposit amounts and incorrect debits.

8. Outstanding Checks • An outstanding check is a deposit which is generally made at the end of the month in the company's records, but did not get processed at the bank on the same day. An outstanding check is a check recorded on one’s personal record, but not yet processed by the bank. • Deduct outstanding checks from the ending balance. These checks have been deducted from your check register, but have not yet cleared the bank.

9. Check Register Reconciliation Deduct bank service charges. Service charges could be account handling fees or check overage fees if you wrote more checks than you are allowed for the month.

10. Interest Earned Add interest earned if you have any account currently earning interest.

11. Check Register Errors Add or deduct errors in the check register. These errors could include posting a payment that was not actually a cash transaction, or leaving out a payment.

12. Compare Both Statements Compare the fixed balance in your check register to the fixed balance on the bank statement. The balances should be equal. If they are not, review the steps over again to find the error.