Bank Reconciliation: How To Reconstruct A Bank Statement
According to the bookkeepers, the bank reconciliation part is the toughest part among the entire process. For some bookkeepers, bank reconciliation is fun, but for the others it is nothing but a boring job. Irrespective of the opinions, it is one of the most fundamental operations of accounting which should 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.
Knowing the concept of 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. 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. The corporation do the bank reconciliation every 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 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. Debit or outstanding orders have always been an 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 the missing information, and the knowledge and skills of the person executing reconciliation. In such circumstances, the bank statements should always be reconstructed.
Depending on the size and extent of the entity concerned, a bank statement for a specific period could consist of several pages. One missing page will not balance. Transactions on the missing page impacts on the result of the bank reconciliation noticeably.
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 basic in working your business in an efficient manner. It is incredibly important to have a transparent and honest transaction all the time. The bank reconciliation is the greatest ways in tracking your records.