The Importance of Bank Reconciliation in Bookkeeping
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Bank reconciliation is the process of comparing your company's bank statements against the transaction entries in your accounting ledger. It ensures that every transaction is accounted for and that your books are accurate.
1. Overlooking Bank Fees and Interest Charges
Banks charge fees for account maintenance, wire transfers, card transactions, and overdrafts. They may also deposit interest directly into your account.
Frequently Asked Questions
How often should bank reconciliation be completed?
We recommend completing bank reconciliations weekly to catch fee errors, duplicate logs, or fraudulent transactions early.
How do you handle timing differences in reconciliations?
Timing differences, like outstanding checks, are logged as unreconciled entries that are verified when they clear in the subsequent bank cycle.