Bank Reconciliation
Define: Bank Reconciliation statement is a document that to compare a company’s accounts activity in term of amount to the Bank concern. Traditionally an Accountant or Bookkeeper completed the Bank reconciliation that ensure a company’s records with accurately reflects the activity of financial activity with a true and fair in company’s bank accounts.
There are several reasons that occur difference between the statement provided by the Bank and company’s book of accounts concern.
The common error in a Bank
Un-recorded transaction: Unrecorded transactions are recorded in the company’s internal record/books of accounts, but they are reflected on the Bank statement, but they are reflected on the bank statement.
Action: The bookkeeper/Accountant is needed to journalize the said transaction /record.
Mismatched transactions: The errors occurs when the transactions are recorded by the company. But the amounts or dates does not match the corresponding transaction on the bank statement.
Mismatched transactions can indicate that the transaction was recorded incorrectly or that there was a mistake made by the bank.
Mismatch vendor: A good bookkeeper is not just looking at transaction dates and amounts when creating a bank reconciliation statement. A new vendor or a vendor that seems unrelated to your business could be a sign of fraudulent behavior by an employee. Bookkeepers check the invoice and description to investigate. They may also look for mismatched vendors in which an amount disbursed to a vendor will match the same amount and date to a vendor of a different name.
Outstanding Checks
These are checks written and recorded in the company’s internal records that have not yet cleared the bank account. Outstanding checks can indicate that the check has not yet been cashed or that it was lost or stolen.
Deposits in Transit:
This occurs when a deposit is recorded in the company’s internal records but has not yet been reflected on the bank statement. Your bookkeeper will find this error when comparing the company’s deposit slips to the bank statement. Deposits in transit can indicate that the deposit has not yet been processed, that the deposit was lost or that the entity has forgotten to send the deposit to the bank.
Bank fees and Charges charged by the bank
Often times, bank charges and fees will not be recorded in the company’s internal records. Your bookkeeper will compare the bank statement to take note of any charges or fees to ensure that there were no mistakes made by the bank and action is to taken by the bookkeeper for recording such transaction by expenses journal. Rajab Ali hashtagquickbooks
