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Home Accounts 3 - The Bank Reconciliation

Updated on July 29, 2011

Bank Reconciliation

A Bank reconciliation is an essential part of any Bookkeeping function.
It can be carried out at any time, but most often at the end of the month.

Something to bear in mind is, that at any one point in time there will be Cheques that have been issued but have yet to be Banked and Cleared.
Therefore they will not appear on your Bank Statement.

Also you may have Banked Cheques or Cash two or three days prior to the end of the month, again they may not appear on your Bank Statement.

The reconciliation process is as follows :

1) Print a copy of your Cash Book spreadsheet.
This will be used to tick of items against your Bank Statement.

2) Make sure you have your Bank Statements for the period up to the end of the month.

3) Start by marking of the Paid In items to your Bank Statements.
I suggest you use a pencil as it is easier to correct any mistakes.

4) You will be left with Paid In items that you have not ticked off in your Cash Book.
Make a list and total.See my example.

5) You should not have any unticked items on your Bank Statements, items such
as Transfers In.
These should have already been identified and entered into your Cash Book.

6) Now carry out the same procedure on the Cash Paid section of the Cash Book.

7) Check off your Cheques/Direct Debits/Standing Orders and Transfers Out from your Cash Book to your Statement.

8) You will be left with Cheques in your Cash Book that have yet to be banked and cleared.
Therefore they will not appear on your Statement.
Make a list and total.See my example.

9) You should not have any Direct Debits/Standing Orders or Transfers Out
remaining un-checked on your Statement.You should have already identified
and entered them in your Cash Book.

10) See my example of a typical Bank Reconciliation report

Typical Reconciliation lists

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Please check my Hub Page Articles
       Sales and Purchase Invoices
   The Cash Book


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