Bank Reconciliation
K.M. Khairul Hasan Arif
MBA, CMA ( Cont.)
Editor
Bank Reconciliation
What Is Bank Reconciliation?
The word “reconciliation” means to make two sets of amounts correspond with each other (i.e. make them equal to each other) by explaining why the two sets of amounts differ.
Bank reconciliation is the process of matching and comparing figures from accounting records against those presented on a bank statement. Less any items which have no relation to the bank statement, the balance of the accounting ledger should reconcile (match) to the balance of the bank statement.
Bank reconciliation allows companies or individuals to compare their account records to the bank's records of their account balance in order to uncover any possible discrepancies.
Since there are timing differences between when data is entered in the banks systems and when data is entered in the individual's system, there is sometimes a normal discrepancy between account balances. The goal of reconciliation is to determine if the discrepancy is due to error rather than timing.
A bank reconciliation statement is a statement which indicates on a specific date why there is a difference between the bank account balance in the general ledger and the current account balance on the bank statement. Entries that appear on the bank statement, but are not recorded in the cash receipts journal or cash payments journal, are recorded in the relevant journal. The journals are therefore adjusted by the missing entries. Items recorded in the cash receipts journal or cash payments journal, but not appearing on the bank statement, are recorded in the bank reconciliation statement.
* CAUSES OF DIFFERENCE:
Differences between the cash book and the bank statement can arise from:
• Timing of the recording of the transactions
• Errors made by the business, or by the bank
Also we can explain another way that the causes that lead to the disagreement of the balances in the cash book and the Pass book can be
MBA, CMA ( Cont.)
Editor
Bank Reconciliation
What Is Bank Reconciliation?
The word “reconciliation” means to make two sets of amounts correspond with each other (i.e. make them equal to each other) by explaining why the two sets of amounts differ.
Bank reconciliation is the process of matching and comparing figures from accounting records against those presented on a bank statement. Less any items which have no relation to the bank statement, the balance of the accounting ledger should reconcile (match) to the balance of the bank statement.
Bank reconciliation allows companies or individuals to compare their account records to the bank's records of their account balance in order to uncover any possible discrepancies.
Since there are timing differences between when data is entered in the banks systems and when data is entered in the individual's system, there is sometimes a normal discrepancy between account balances. The goal of reconciliation is to determine if the discrepancy is due to error rather than timing.
A bank reconciliation statement is a statement which indicates on a specific date why there is a difference between the bank account balance in the general ledger and the current account balance on the bank statement. Entries that appear on the bank statement, but are not recorded in the cash receipts journal or cash payments journal, are recorded in the relevant journal. The journals are therefore adjusted by the missing entries. Items recorded in the cash receipts journal or cash payments journal, but not appearing on the bank statement, are recorded in the bank reconciliation statement.
* CAUSES OF DIFFERENCE:
Differences between the cash book and the bank statement can arise from:
• Timing of the recording of the transactions
• Errors made by the business, or by the bank
Also we can explain another way that the causes that lead to the disagreement of the balances in the cash book and the Pass book can be