Account Reconciliation

Pull up both your internal cash register (or accounting system export) and the official bank statement for the same period. Go line by line and check that each payment and deposit shows up in both records. What to look for: • Transaction dates that match (or are within normal processing time) • Amounts that are identical down to the cent • Any transactions that appear in one record but not the other Tip: Sort both lists by date or amount to make matching easier. Flag anything that doesn't line up—you'll investigate those in the next steps.

Now it's time to focus on the differences. Create a list of all transactions that appear in one record but not the other. Common reasons for mismatches: • Outstanding checks – Checks you've written that haven't cleared the bank yet • Deposits in transit – Money you've recorded but the bank hasn't processed • Bank fees or interest – Charges or credits the bank added that you didn't record yet • Timing differences – Transactions recorded on different dates Document each discrepancy with the date, amount, and likely reason. You'll need this list to make adjustments later.

Review the bank statement carefully for errors. Banks make mistakes too—it's rare, but it happens. Common bank errors to watch for: • Duplicate transactions – Same charge appearing twice • Wrong amounts – Decimal points in the wrong place, transposed digits • Missing transactions – Deposits or payments that never posted • Transactions from wrong accounts – Someone else's transaction on your statement Also check your own records for: • Typos when entering amounts • Transactions recorded under the wrong date • Entries that were accidentally deleted or never recorded If you find a bank error, contact the bank immediately and note the reference number for your records.

Go back through the transactions that did match between your records and the bank statement. Double-check that they're genuinely the same transaction, not just coincidentally the same amount. Verification checklist: • Dates are within expected processing time (usually 1-3 business days) • Transaction descriptions match or make sense • Payee/payer names correspond correctly • No two different transactions happen to have the same amount Why this matters: It's easy to match two different $50 transactions by mistake. Taking a few extra minutes here prevents headaches later. Mark each verified match as confirmed before moving on.

This is where everything comes together. Take all the discrepancies you've identified and make the necessary adjustments to bring your records in line with the bank. Typical adjustments to make: • Add bank fees and service charges to your records • Record interest earned that the bank added • Note outstanding checks that haven't cleared yet • Document deposits in transit • Correct any errors you found in your own records Final check: After all adjustments, your adjusted book balance should equal the adjusted bank balance. If there's still a difference, go back and look for what you missed. Keep records of: All adjustments made, supporting documents, and the final reconciliation statement. You'll need these for audits and to track recurring items in next month's reconciliation.