Bank reconciliation

by Angel
(South Africa)

Q: When talking about a bank reconciliation, what exactly are we talking about?

A: A bank reconciliation is the comparison of the bank statement you get from your bank with the business records concerning the bank account.

The bank statement comes once a month normally and shows all deposits, payments, etc.

You compare this to your cashbook (or cash receipts journal and cash payments journal) and look for any discrepancies.

If there are discrepancies, you draw up a bank reconciliation statement. This statement is for your own records and can also be sent to the bank so they correct any errors regarding the business bank account.

Make sense?

For the full lesson on bank reconciliations together with practice questions, order the site's official basic accounting book.