A tough part of bookkeeping can be the bank reconciliation. For some bookkeepers reconciliation is fun, to for others it is nothing but a boring job. Whatsoever way we look at it, it is one of the fundamental functions of accounting which must be done. Checks which are processed late can be bounced, if sufficient stipulation for it has not been done in the business books.
The bank reconciliation is the simple process to check the balance on a bank statement on a given date with the balance in your cash book. Bank charges are added to cashbook payments, outstanding checks are deducted, and outstanding deposits are added. Debit or standing orders are added to payments.
Many people have a hold on bank reconciliation to some extent. There are circumstances that bank reconciliations cannot balance. And this could be attributed more too missing information, than the knowledge of the person carrying out reconciliation. In such circumstances, the bank statements must be reconstructed.
Depending on the size of the entity concerned, a bank statement for a particular period could consist out of several pages. If in any case, one page is missing, the reconciliation will not balance. Transactions on the missing page noticeably impacts on the result of the bank reconciliation.
What if you get to know that a page is missing, and is in no position to contact the bank for duplicate statements? Normally, bank archives statements older than 6 months. However, it could cause delays, when copies are requested.
Here are some guidelines on reconstructing a bank statement:
1. Check the bank statements sequence
2. If closing balance on one page would differ from the following statements opening balance, calculate the difference.
3. If a difference has been recognized, examine your check book to fix that amount to a check number not acknowledged on the statement.
4. Verify recurring payments i.e. standing orders for previous months, and check if that amount cannot be connected to the missing information.
5. List all payments and deposit. Add deposits to opening balance. Deduct all payments and evaluate to final balance. The discrepancy could be unrepresented checks or bank charges.
6. Some bank statements give accurate detail on how many checks were processed and the total amounts on the first page. These make things easier.
Bank reconciliations can turn out to be challenging, but fun.
SOURCE:
http://www.a1articles.com/article_921855_15.html
The bank reconciliation is the simple process to check the balance on a bank statement on a given date with the balance in your cash book. Bank charges are added to cashbook payments, outstanding checks are deducted, and outstanding deposits are added. Debit or standing orders are added to payments.
Many people have a hold on bank reconciliation to some extent. There are circumstances that bank reconciliations cannot balance. And this could be attributed more too missing information, than the knowledge of the person carrying out reconciliation. In such circumstances, the bank statements must be reconstructed.
Depending on the size of the entity concerned, a bank statement for a particular period could consist out of several pages. If in any case, one page is missing, the reconciliation will not balance. Transactions on the missing page noticeably impacts on the result of the bank reconciliation.
What if you get to know that a page is missing, and is in no position to contact the bank for duplicate statements? Normally, bank archives statements older than 6 months. However, it could cause delays, when copies are requested.
Here are some guidelines on reconstructing a bank statement:
1. Check the bank statements sequence
2. If closing balance on one page would differ from the following statements opening balance, calculate the difference.
3. If a difference has been recognized, examine your check book to fix that amount to a check number not acknowledged on the statement.
4. Verify recurring payments i.e. standing orders for previous months, and check if that amount cannot be connected to the missing information.
5. List all payments and deposit. Add deposits to opening balance. Deduct all payments and evaluate to final balance. The discrepancy could be unrepresented checks or bank charges.
6. Some bank statements give accurate detail on how many checks were processed and the total amounts on the first page. These make things easier.
Bank reconciliations can turn out to be challenging, but fun.
SOURCE:
http://www.a1articles.com/article_921855_15.html
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