Bank Reconciliation: How To Reconstruct A Bank Statement
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. 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.
Defining bank reconciliation
The bank reconciliation is the process of accounts and giving enough details to the discrepancies. 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. Back log would be eliminated if you follow the rules of bank reconciliation. 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 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 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 extent and size of the entity concerned, every bank statement for a particular period could include 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 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 fundamental in operating your business in an informed way. It is very important that you have a transparent, organized and updated bookkeeping system in place. Without a doubt, one of the best ways to keep track your records is the bank reconciliation.