Understanding Bank Reconciliation
Bank reconciliation can be the toughest part for bookkeeping. For some bookkeepers, bank reconciliation is fun, but for the others it is nothing but a boring job. 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.
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. There may be differences, and this is due to the differences brought by the timing of registering in your book and the registering of information. 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.
Reasons for maintaining bank reconciliation
When you do monthly bank reconciliation, it keeps your company’s financial records updated and apparent. You never build up an erroneous backlog. Furthermore, you can comprehend your accounting status all the time. It is important that you have a reliable and prompt communication system with the financial institution so that you keep your records apparent and precise. The bank reconciliation is the basic process in checking the account on every bank statement. Charges at the bank are an additional to the deducted outstanding and amazing deposits. Outstanding or debit orders are additional to the payments.
A lot of people have a hold on bank reconciliation to some extent. There are instances that bank reconciliations cannot balance. 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.
There are several pages behind the size and extent of the corporation concerned. One missing page will not balance. Transactions on the missing page impacts on the result of the bank reconciliation noticeably.
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 the basic in working your business in an efficient manner. It is incredibly important to have a transparent and honest transaction all the time. Without a doubt, one of the best ways to keep track your records is the bank reconciliation.
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