Review your account statement
Posted: Mon Dec 23, 2024 10:45 am
Here are the steps in greater detail.
The first thing to do when reconciling your accounts is to gather account statements for the periods and accounts you're reconciling. Check each of the deposits, withdrawals, and payments (canceled checks) listed on each statement, taking note of any transactions you don't recognize. Also note your ending balance so that you can check it against your own accounting later.
Bottom line: Reviewing account statements is a business owner's first chance to spot potentially new zealand whatsapp number fraudulent transactions and flag them for further review.
2. Compare statements to internal accounting records.
Once you've reviewed the account activity recorded by your bank during the reconciliation period, compare the transactions listed on your statements to your own records. Make sure all transactions appear both in your records and on your bank statements in the same amounts. Take special note of any that don't match or that you don't recognize. More likely than not, you'll have a few transactions (both debits and credits) that don't match up and require some adjustments.
Tip: Modern accounting software makes the comparison process almost entirely automatic by linking your internal records to your online bank records. This makes it easy to spot any mistakes in your accounting of transactions.
3. Adjust for uncashed checks.
If you regularly send payments by check for your business, chances are you've sent a few checks that haven't been cashed yet, so they won't be reflected in your bank records. This means you may have recorded quite a few transactions that aren't included in your bank statement or reflected in your final balance.
In other words, your bank statement may show "available" funds that could disappear any day when payees cash your checks. For purposes of account reconciliation, you'll need to adjust your records by adding back the value of any uncashed checks or subtracting the value of any deposits that haven't cleared yet.
Tip: If you have payments that have been outstanding for more than 30 days, you may want to contact those payees to confirm their contact details and that they actually received your payment. Otherwise, they may send your payment to collections.
4. Record interest income and other credits.
Before moving on, you may also need to adjust for interest income and other debits or credits that appear in your bank statement but not in your internal records. However, you should limit your adjustments to transactions that you can confirm easily with your bank. These are some typical adjustments:
Interest earned on your account
Bank fees that you may not get alerts about until the statement comes (such as paper statement fees)
Overdraft or late-payment fees
Wire-transfer fees
Bank fee reversals
If you notice any of these types of transactions on your statement, you should confirm them with your bank and adjust as necessary by entering transactions in your records to match your statement.
5. Review any other discrepancies.
Once you've adjusted for uncashed checks and easily confirmable debits or credits on your bank statement, check any other transactions that don't match up. In some cases, transactions may appear on your bank statement that you simply forgot to record. Other times, your bank may have made a mistake by crediting your account instead of another customer's. In a worst-case scenario, your account may have been impacted by fraud.
The first thing to do when reconciling your accounts is to gather account statements for the periods and accounts you're reconciling. Check each of the deposits, withdrawals, and payments (canceled checks) listed on each statement, taking note of any transactions you don't recognize. Also note your ending balance so that you can check it against your own accounting later.
Bottom line: Reviewing account statements is a business owner's first chance to spot potentially new zealand whatsapp number fraudulent transactions and flag them for further review.
2. Compare statements to internal accounting records.
Once you've reviewed the account activity recorded by your bank during the reconciliation period, compare the transactions listed on your statements to your own records. Make sure all transactions appear both in your records and on your bank statements in the same amounts. Take special note of any that don't match or that you don't recognize. More likely than not, you'll have a few transactions (both debits and credits) that don't match up and require some adjustments.
Tip: Modern accounting software makes the comparison process almost entirely automatic by linking your internal records to your online bank records. This makes it easy to spot any mistakes in your accounting of transactions.
3. Adjust for uncashed checks.
If you regularly send payments by check for your business, chances are you've sent a few checks that haven't been cashed yet, so they won't be reflected in your bank records. This means you may have recorded quite a few transactions that aren't included in your bank statement or reflected in your final balance.
In other words, your bank statement may show "available" funds that could disappear any day when payees cash your checks. For purposes of account reconciliation, you'll need to adjust your records by adding back the value of any uncashed checks or subtracting the value of any deposits that haven't cleared yet.
Tip: If you have payments that have been outstanding for more than 30 days, you may want to contact those payees to confirm their contact details and that they actually received your payment. Otherwise, they may send your payment to collections.
4. Record interest income and other credits.
Before moving on, you may also need to adjust for interest income and other debits or credits that appear in your bank statement but not in your internal records. However, you should limit your adjustments to transactions that you can confirm easily with your bank. These are some typical adjustments:
Interest earned on your account
Bank fees that you may not get alerts about until the statement comes (such as paper statement fees)
Overdraft or late-payment fees
Wire-transfer fees
Bank fee reversals
If you notice any of these types of transactions on your statement, you should confirm them with your bank and adjust as necessary by entering transactions in your records to match your statement.
5. Review any other discrepancies.
Once you've adjusted for uncashed checks and easily confirmable debits or credits on your bank statement, check any other transactions that don't match up. In some cases, transactions may appear on your bank statement that you simply forgot to record. Other times, your bank may have made a mistake by crediting your account instead of another customer's. In a worst-case scenario, your account may have been impacted by fraud.