thekingsway
1 post
Jun 25, 2024
6:46 AM
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Bank reconciliation is accountants in Bow a critical process that ensures the accuracy and consistency between a company's accounting records and its bank statement. It involves comparing the balance of cash and cash equivalents reported in the company's accounting records (general ledger) with the balance reported by the bank.
Key steps in performing a bank reconciliation include:
Comparing Bank Statement: The first step is to obtain the latest bank statement from the bank and compare it with the ending cash balance reported in the company's general ledger.
Identifying Differences: The next step is to identify any discrepancies between the bank statement balance and the company's records. Common differences include outstanding checks (issued but not yet cleared by the bank), deposits in transit (recorded by the company but not yet reflected in the bank statement), bank fees, interest earned, and errors in recording transactions.
Adjusting Entries: Adjustments are made to the company's records to account for the identified differences. For example, outstanding checks and deposits in transit are reconciled to ensure the correct cash balance.
Reconciling Items: Reconciling items such as bank errors or discrepancies may require communication with the bank to resolve issues and ensure accurate reporting.
Last Edited by thekingsway on Jun 25, 2024 6:47 AM
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