A check is a document that orders a payment of money from a bank account. Checkbook
contains checks and check stubs. The checks are filled out by the depositors
made, and of charges made by the bank.
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| Example of a Check
Bank Reconciliation happens when you compare your records to the bank’s records. It's important to do a bank reconciliation at least every month to make sure you know what’s happening with your accounts.
There might be differences in the balances when you do a reconciliation statement. It may be due to:
1. Outstanding checks. These are checks issued by the
depositor but have not yet been presented to the bank for payment.
2. Deposits in
transit. These are deposits made but late to be included in the monthly bank
statement.
3. Service
charges.
4. Errors in the
check stub entries.
5. Cancelled
checks. These are checks that have been paid by the bank.
Without bank reconciliation, you may not have a clear idea of how much cash is available in your account. You might bounce checks and incur overdraft charges. You also expose yourself to risk. People may be stealing from your account. If you never look through each transaction, you’ll never know about it.
You can do a bank reconciliation by following this process:
You can also use your computer to do the work for you by using tools like the Excel Bank Reconciliation Template. |
References:
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