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According to the bookkeepers, the bank reconciliation part is the toughest part among the entire process. For some bookkeepers, bank reconciliation is fun, but for the others it is nothing but a boring job. Irrespective of the opinions, it is one of the most fundamental operations of accounting which should be done. Even the checks which are lately processed can be bounced.
What is bank reconciliation?
The bank reconciliation is the process of accounts and giving enough details to the discrepancies. There may be differences, and this is due to the differences brought by the timing of registering in your book and the registering of information. Such discrepancy is a typical situation and is rectified automatically within the small time. However, most frequently the discrepancy is due to an mistake, which has to be manually rectified and to catch this mistake, you need bank reconciliation. The corporation do the bank reconciliation every end of the month.
Why bank reconciliation is a must
First of all, maintaining a bank reconciliation every month will keep your company’s financial records updated and clear. As a result, back log would be eliminated. Moreover, you will understand your accounting status all the time. It is important that you have a reliable and prompt communication system with the financial institution so that you keep your records apparent and precise. The bank reconciliation is the fundamental process in checking the balance on every bank statement on a specified date with the balance in your book. Bank charges are an additional to the cashbook payments, deducted outstanding checks, and excellent deposits are added. Outstanding or debit orders are additional to the payments.
A lot of people have a hold on bank reconciliation to some extent. There is a certain situation that the bank reconciliation cannot be balanced. And this could be due to some missing information, than the skills and knowledge of the person carrying out reconciliation. In such circumstances, the bank statements should always be reconstructed.
Depending on the extent and size of the entity concerned, every bank statement for a particular period could include of several pages. The transaction will not balance if there is one page missing. Transactions on the missing page influences on the result of the bank reconciliation apparently.
If you want to get the most of your company, you need to take care of the money transaction behind the principle of bank reconciliation.
Bookkeeping is basic in working your business in an efficient manner. It is incredibly important to have a transparent and honest transaction all the time. Without a doubt, one of the best ways to keep track your records is the bank reconciliation.