Home / Business / What is the purpose of a bank reconciliation statement?

What is the purpose of a bank reconciliation statement?

Bank reconciliation statements reconcile bank records with your company’s accounting. This reconciliation should be completed monthly to check for unauthorized errors or withdrawals. Bank reconciliation states are an important part of the financial audit procedure that each company has to do.

Bank reconciliation

To balance a bank reconciliation statement, take the balance on the bank statement and subtract any exceptional checks that were written but did not offset the bank. This should match the balance in your bookkeeping, once the bank charges have been seized.

Secure Money

Brakes and counterweights

Reconciliation statement by a bank provides balances and controls for your Bank’s accounting and accounting. If an individual has been creating checks or pilfering money or any valuable things from an account, thus the bank reconciliation statements will catch it. This is the reason a valuable accounting regulation is an individual who handles accounts payable and writes checks never puts to rights the account. Bank reconciliation states should always be reconciled by another person to have a separation of duties from the position.

Outstanding issues

Bank reconciliation states will indicate in case there are wires which are not erased the bank or deposits that are not registered or checks in circulation. f an item is outstanding for more than one month, you should contact the recipient to verify the bank account or mailing address. You may need to cancel and reissue a check or, if not received after passing of many months. Lack of deposits require a receipt if there is a bank error or a check if there is an error from the employee.

Bank Errors

Sometimes the bank will make mistakes. Son could be duplicated or someone else’s account checks could be knocking on your account. Bank Reconciliation statements provide detailed transaction history to help you find the correct bank errors.

Bank charges

Bank reconciliation statements will list all bank charges that have been charged to your account. You will have to enter these bank charges into your ledger to reconcile the instruction. It is always a good idea to check the taxes to make sure your bank account is not an overcharge in error.

To find out – how much money is in your current account, a reconciliation of accounts is in order. It is best to reconcile them to current accounts on a monthly basis and is the best time to do so as soon as you receive your bank statement. If you get a paper bank statement or a paperless one online, the account reconciliation process is the same.

About Nina L. Owens