4 easy steps for Bank Reconciliation
What is Bank reconciliation?
Bank reconciliation is the process of comparing a company’s internal financial records (usually a general ledger or cash book) with the bank statement received from the bank. The goal is to ensure that the balances match and to identify any discrepancies between the two sets of records. This process helps in identifying errors, unauthorized transactions, and ensuring that all financial records are accurate and up to date.
How to do Bank Reconciliation:
Here is a step-by-step guide to performing a bank reconciliation:
Step 1: Gather Necessary Documents:
- Obtain the bank statement for the relevant period.
- Have the company’s cash book or ledger ready
Step 2: Compare opening Balances:
- Ensure that the opening balance of the bank statement matches the opening balance in your records for the same period.
Step 4: Now, Find out the Miss Match Amounts between Bank Ledger and Bank Statement
Miss Match Type 1. The Cheques that are Paid but not cleared from Bank.
Miss Match Type 2. The Cheques that were received and posted in Bank Ledger but not deposited to Bank.
Miss Match Type 3. Cheques cleared from Bank but not recorded in Bank Ledger.
Miss Match Type 4. Cheques Deposited in Bank , But not recorded in Bank Ledger.
Step 4 :Now Prepare Bank Reconciliation Statement:
Write the Closing Amount in your Bank Ledger ——————————— XXX
Add:
The Cheques that are Paid but not cleared from Bank ————- XXX
Cheques cleared from Bank but not recorded in Bank Ledger.—- XXX
Less:
The Cheques received and posted in Bank Ledger but not deposited to Bank. —– XXX
Cheques Deposited in Bank , But not recorded in Bank Ledger. —- XXX
You are Done!! Now, the amount will be same as your Bank Statement.
