Getting To The Point – Businesses
Understanding Bank Reconciliation
Bank reconciliation has become the toughest part for the world of bookkeeping. The opinion of every bookkeeper is very different because some find it interesting, while others is boring. Irrespective of how the professionals see it, it has always been the most essential operations. Even the checks which are lately processed can be bounced.
Knowing the concept of 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 an mistake, which has to be manually rectified and to catch this mistake, you need bank reconciliation. Every end of the month, all corporations do the bank reconciliation.
Why bank reconciliation is a must
First of all, maintaining a bank reconciliation every month will keep your company’s financial records updated and clear. As a result, back log would be eliminated. Furthermore, you can comprehend your accounting status all the time. It is incredibly important that you have solid and reliable communication and collaboration power with the financial 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. Bank charges are an additional to the cashbook payments, deducted outstanding checks, and excellent deposits are added. Debit or outstanding orders have always been an additional to the payments.
At some point in their lives, a lot of people hold a bank reconciliation. However, since life is not perfect, there is a situation that bank reconciliation will not be balanced. And this could be due to the missing information, and the knowledge and skills of the person executing reconciliation. In such instances, the bank statements should be reconstructed.
Depending on the size and extent of the entity concerned, a bank statement for a specific period could consist of several pages. The transaction will not balance if there is one page missing. 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 the 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. One of the ways to keep track of your books is the bank reconciliation.