Bank reconciliation has become the toughest part for the world of bookkeeping. For some bookkeepers, bank reconciliation is fun, but for the others it is nothing but a boring job. Irrespective of the opinions, it is one of the most fundamental operations of accounting which should be done. As you can see, even the checks that has been processed late.
Knowing the concept of bank reconciliation
The procedure of comparing and contrasting the account balance provided by the bank with that of the firm’s book of accounts as well as explaining 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 a single mistake, which has to be rectified on hand 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 need
When you do monthly bank reconciliation, it keeps your company’s financial records updated and apparent. As a result, back log would be eliminated. 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 balance on every bank statement on a given date with the account balance in your cash book. Bank charges are an additional to the cashbook payments, deducted outstanding checks, and excellent deposits are added. Outstanding or debit orders are additional to the payments.
A lot of people have a hold on bank reconciliation to some extent. There is a certain situation that the bank reconciliation cannot be balanced. And this could be due to 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. The transaction will not balance if there is one page missing. Transactions on the missing page influences on the result of the bank reconciliation apparently.
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 fundamental in operating your business in an informed way. It is very much important that you have an organized, transparent and most up to date system in place.