Bank Reconciliation: How To Reconstruct A Bank Statement
Bank reconciliation has become the toughest part for the world of bookkeeping. The opinion of every bookkeeper is very different because some find it interesting, while others is 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.
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. There may be differences, and this is due to the differences brought by the timing of registering in your book and the registering of information. 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. Every end of the month, all corporations do the bank reconciliation.
Why bank reconciliation is a need
Every time you do monthly bank reconciliation, the records of the company will be clear and up to date. As a result, back log would be eliminated. Moreover, you will be able to understand the status of your accounting from time to time. It is incredibly important that you have solid and reliable communication and collaboration power with the financial system. 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. Debit or outstanding 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.
Depending on the extent and size of the entity concerned, every bank statement for a particular period could include of several pages. If in any case, one page is missing, the reconciliation 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 basic in working your business in an efficient manner. It is very important that you have a transparent, organized and updated bookkeeping system in place. The bank reconciliation is the greatest ways in tracking your records.
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