Step-By-Step Guide to Completing a Bank Reconciliation

Bookkeeper showing a business owner how to account for business expenses on a laptop.

A bank reconciliation is the process of matching the transactions on your bank statement with the transactions in your accounting records. This is an important step in maintaining accurate financial records and catching any errors or discrepancies. Here’s a step-by-step guide on how to perform a bank reconciliation:

Gather your information 

Before you begin your reconciliation, gather all the necessary information. This includes your bank statement, your accounting records, and any deposit slips or canceled checks. It’s important to have all this information in front of you so you can easily match the transactions.

Compare the ending balances 

The first step in the reconciliation process is to compare the ending balances on your bank statement and your accounting records. They should match, if not, look for any discrepancies that could be causing the difference.

Review the transactions

Next, review the transactions on your bank statement and compare them to the transactions in your accounting records. Look for any transactions that are not in your records or any discrepancies in the amounts. Be sure to check for any errors, such as transposed numbers or mis-categorized transactions.

Make adjustments 

If you find any discrepancies or errors, make the necessary adjustments to your accounting records. This could include correcting the amounts or re-categorizing the transactions.

Check for outstanding checks 

Review your bank statement for any outstanding checks that have not yet cleared the bank. Compare this to your records and ensure that these checks are included in your records as outstanding.

Enter any bank charges

Look for any bank charges or fees on your bank statement. Be sure to enter these charges in your accounting records as well.

Update your records 

Finally, update your records with the corrected information and mark the reconciliation as complete. Make sure you keep copies of your bank statement, deposit slips, and canceled checks for future reference.

Performing a bank reconciliation is an important step in maintaining accurate financial records. By following these steps, you can ensure that your records match your bank statement and that any errors or discrepancies are caught and corrected. It’s important to do the reconciliation regularly, at least monthly, to ensure that your records are always accurate and up-to-date.

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