Bank Reconciliation

Bank reconciliation is defined as comparision of the company documents and records against the bank records. Doing this every month helps one spot any fraud or non-general transactions.

 

Defining Bank Reconciliation

This process is executed by collating the monthly statements from bank to the balances as well as transactions. Both the cost must match on point and it must be ensured by checking each transaction differently

Tips:

  • A company or individual should make sure that a balance is shown at the ending agreeable to you.
  • If you know ‘evening-out’ your check book, then you already know bank reconciliation. It’s basically the same reason for company.
  • It is OK to have small variations due to timing but one must be able to answer those. Like you bank will show a more balance while one of your given cheque is not deposited, you can reduce the balance as per the cheque.
  • Similarly, an e-payment might show a day previous or a day following end of month whereas you might think of it as in a different month. There is no worries as long as these things can be dealt with.

The important to Reconcilement

An account must be reconciled regularly so that there is no big problem.

There may be different set of rules for different kind of accounts such as a private/individual account or a company or business account. The code of conduct for respective account must be followed as per the law.

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