Understanding Bank Reconciliation
According to the bookkeepers, the bank reconciliation part is the toughest part among the entire process. Some bookkeepers find bank reconciliation as a very interesting job., but there are those who find it very boring. 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.
What is 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 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. The corporation do the bank reconciliation every end of the month.
Why bank reconciliation is a must
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 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 fundamental process in checking the balance on every bank statement on a specified date with the balance in your book. Charges at the bank are an additional to the deducted outstanding and amazing deposits. Outstanding or debit orders are additional to the payments.
At some point in their lives, a lot of people hold a bank reconciliation. 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. If in any case, one page is missing, the reconciliation will not balance. 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 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.
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