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Bank reconciliation
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This article duplicates the scope of other articles, specifically, Reconciliation
(accounting). Please discuss this issue on the talk page and edit it to conform
with Wikipedia's Manual of Style. (June 2014)

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In bookkeeping, a bank reconciliation is the process by which the bank account

balance in an entity’s books of account is reconciled to the balance reported by the
financial institution in the most recent bank statement. Any difference between the two
figures needs to be examined and, if appropriate, rectified. [1]
Bank statements are commonly routinely produced by the financial institution and used
by account holders to perform their bank reconciliations. To assist in reconciliations,
many financial institutions now also offer direct downloads of financial transaction
information into the account holders accounting software, typically using the .csv
file format.
Differences between an entity’s books of account and the bank’s records may arise, for
example, because:

 cheques issued by the entity have not been presented to

the bank or the bank has dishonoured a cheque,
 a banking transaction, such as a credit received, or a
charge made by the bank, has not yet been recorded in the
entity's books, or
 either the bank or the entity itself has made an error.
Sometimes it may be easy to reconcile the difference by looking at the transactions in
the bank statement since the last reconciliation and the entity's own accounting records
(cash book) to see if some combination of them tally with the difference to be explained.
Otherwise it may be necessary to go through and match every transaction in both sets
of records since the last reconciliation, and identify which transactions remain
unmatched. The necessary adjustments should then be made in the cash book, or
reported to the bank if necessary, or any timing differences recorded to assist with
future reconciliations.
For this reason, and to minimise the amount of work involved, it is good practice to carry
out reconciliations at reasonably frequent intervals.

Bank reconciliation statement[edit]

A bank reconciliation statement is a statement prepared by the entity as part of
the reconciliation process which sets out the entries which have caused the difference
between the two balances. It would, for example, list outstanding cheques (ie., issued
cheques that have still not been presented at the bank for payment).
 The entries in the entity’s books to rectify the discovered discrepancies (except for the
outstanding cheques) would typically be made in a subsequent date or period, not
backdated. When cheques become stale (ie., out of date), they would typically be
reversed, not cancelled.

References[edit]
1. ^ Carl S. Warren (18 January 2010). Survey of Accounting. Cengage
Learning. p.  183. ISBN 978-0-538-74909-1. Retrieved  9 April  2012.

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