5 Key Takeaways on the Road to Dominating Accountants
Bank reconciliation has become the toughest part for the world of bookkeeping. For some bookkeepers, bank reconciliation is fun, but for the others it is nothing but a boring job. Whatever way we look at it, it is one of the fundamental functions of accounting which must be done. 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.
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 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 firms generally do the bank reconciliation at the end of the month.
Why bank reconciliation is a need
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 very important that you have quick and solid communication system with the monetary system. The bank reconciliation is the basic process in checking the balance on every bank statement on a given date with the account balance in your cash book. Bank charges are an additional to the cashbook payments, deducted outstanding checks, and excellent deposits are added. Outstanding or debit orders are additional to the payments.
Too many people in this world have hold a bank reconciliation at some point. However, since life is not perfect, there is a situation that bank reconciliation will not be balanced. And this could be due to some missing information, than the skills and knowledge of the person carrying out reconciliation. In such circumstances, the bank statements should always 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 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 very much important that you have an organized, transparent and most up to date system in place.