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Bank Reconciliation: How To Reconstruct A Bank Statement

Bank reconciliation can be the toughest part for bookkeeping. For some bookkeepers, bank reconciliation is fun, but for the others it is nothing but a boring job. Whatever way we look at it, it is one of the fundamental functions of accounting which must be done. As you can see, even the checks that has been processed late.

What is bank reconciliation?
The process of comparing and contrasting the account balance provided by your bank with that of the company’s book of accounts as well as giving details of any discrepancy is the bank reconciliation. There may be differences, and this is due to the differences brought by the timing of registering in your book and the registering of information. Such discrepancy is a normal or typical situation and is rectified automatically within the small time. However, most frequently the discrepancy is due to an mistake, which has to be manually rectified and to catch this mistake, you need bank reconciliation. The firms generally do the bank reconciliation at the end of the month.

Why bank reconciliation is a need
When you do monthly bank reconciliation, it keeps your company’s financial records updated and apparent. You never build up an erroneous backlog. Moreover, you will be able to understand the status of your accounting from time to time. It is incredibly important that you have solid and reliable communication and collaboration power with the financial system. The bank reconciliation is the basic process in checking the balance on every bank statement on a given date with the account balance in your cash book. Bank charges are an additional to the cashbook payments, deducted outstanding checks, and excellent deposits are added. Debit or outstanding orders are additional to the payments.

A lot of people have a hold on bank reconciliation to some extent. There is a certain situation that the bank reconciliation cannot be balanced. And this could be due to the missing information, and the knowledge and skills of the person executing reconciliation. In such instances, the bank statements should be reconstructed.

Depending on the extent and size of the entity concerned, every bank statement for a particular period could include of several pages. One missing page will not balance. Transactions on the missing page impacts on the result of the bank reconciliation clearly.
If you want to get the most of your firm, you need to take care of your financial transaction behind the principle of bank reconciliation.

Bookkeeping is fundamental in operating your business in an informed way. It is very much important that you have an organized, transparent and most up to date system in place. The bank reconciliation is the greatest ways in tracking your records.

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