January 01, 2016

Bank reconciliation: a simple explanation.

Bookkeeping-101

Bank reconciliation: a simple explanation.

What is it? A bank reconcilation is a process in which a company checks that both its records and the bank’s records are correct.

? Discrepancies between bank records and company records concerning cash transactions are very common and can result from errors made by either the bank or the company. Bank reconcilation is critical to make sure these errors are caught. Doing a monthly bank reconcilation also helps you monitor cash flows and, importantly, gives you a way to uncover irregularities such as unauthorized bank withdrawals.

How often should it be done? Most companies do a bank reconciliation once per month.

Have questions? Contact the author, Jesse Gildesgame, at jesseg@bookstime.com.

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