Bank reconciliation is the essential process of aligning your internal cash records such as cash books or accounting software—with your bank statement balances. By systematically comparing deposits, withdrawals, fees, and interest entries, you can uncover discrepancies caused by timing differences, bank charges, outstanding checks, or unrecorded transactions.
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A Bank Reconciliation Statement is a critical financial tool that aligns your business’s internal cash records—like cash books or accounting software—with bank statements. Since transaction timing differences, bank charges, interest, or even errors can cause mismatches, reconciliation ensures your records reflect true financial status. Start by comparing the opening balances of both your records and bank statement. Then, match each transaction—both credits and debits—highlighting outstanding items like uncleared checks or deposits in transit. These are timing differences between book and bank solvexia.com. Next, adjust the bank balance by adding in-transit deposits and deducting outstanding checks; adjust your book balance by accounting for bank service fees, interest credited, or corrections for recorded errors
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Monthly is a minimum; high transaction volumes may require weekly or even daily reconciliations .
A BRS without adjusting cash book, or Adjust cash book and reconcile afterward
Notify the bank for corrections and update your records accordingly .
Ideally someone not involved in recording transactions; have a second person verify .
software like QuickBooks, Zoho, Xero, or Tally enhances accuracy, automates tasks, reconciliations, and financial reporting. But basic businesses starting manually or on Excel can still operate effectively .