Account Reconciliation

One most important tasks to be done during the accounting cycle is account reconciliation - more specifically, bank reconciliation. This is typically done on a monthly basis when bank statements are released.

What is reconciliation? It is the process of looking at ending balances between two sources of information (i.e. your bank statement and the cash account in your books) for a given time period and identifying and resolving discrepancies between the ending balance amounts. The most common reason for discrepancies is timing. Examples include, but not limited to: checks outstanding, bank deposits not made yet, and bank fees being assessed.

Here's why reconciliation should be done:

1) Identifies potential fraud

2) Tracking cash flow patterns

3) Maintains accuracy of books

4) Makes tax preparation time faster

5) Uncovers any accounting errors

If you using a computerized accounting software, reconciliation is fast and easy! Simply enter your bank statement end date and ending balance. Please note reconciliation can be done on credit card and savings accounts.