Bank Reconciliation: How To Reconstruct A Bank Statement
Bank reconciliation has become the toughest part for the world of bookkeeping. Some bookkeepers find bank reconciliation as a very interesting job., but there are those who find it very boring. Irrespective of how the professionals see it, it has always been the most essential operations. Checks which are processed very late can be bounced, if there is a sufficient stipulation for it has not been done in the business books.
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 an mistake, which has to be manually rectified and to catch this mistake, you need bank reconciliation. The corporation do the bank reconciliation every end of the month.
Reasons for maintaining bank reconciliation
First of all, maintaining a bank reconciliation every month will keep your company’s financial records updated and clear. 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 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 account on every bank statement. 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.
Too many people in this world have hold a bank reconciliation at some point. There are instances that bank reconciliations cannot balance. 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. One missing page 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 company, you need to take care of the money transaction behind the principle of bank reconciliation.
Bookkeeping is the basic in working your business in an efficient manner. It is incredibly important to have a transparent and honest transaction all the time. One of the ways to keep track of your books is the bank reconciliation.