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. 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 bank reconciliation is the process of accounts and giving enough details to the discrepancies. You should consider that the discrepancy in the balance may be due to the timing brought differently in registering the information in the books and in your company’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.
Reasons for maintaining bank reconciliation
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 very important that you have quick and solid communication system with the monetary 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. Outstanding or debit orders are 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.
There are several pages behind the size and extent of the corporation concerned. If in any case, one page is missing, the reconciliation will not balance. 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 the basic in working your business in an efficient manner. It is very much important that you have an organized, transparent and most up to date system in place. One of the ways to keep track of your books is the bank reconciliation.