9 Easy Steps: How to Reconcile your Company’s Bank Account in QuickBooks Online

These outstanding deposits must be deducted from the balance, as per the cash book, in the bank reconciliation statement. Deposits in transit, or outstanding deposits, are not showcased in the bank statement on the reconciliation date. This is due to the time delay that occurs between the depositing of cash or a check and the crediting of it into your account.

1. And as a result, it gets easier to ascertain the correct balance in the balance sheet.
2. At times, your customers may directly deposit funds into your business’ bank account, but your business will not notified about this the bank statement is received.
3. To reconcile your bank statement with your cash book, you’ll need to ensure that the cash book is complete and make sure that the current month’s bank statement has also been obtained.
4. If there are transactions that haven’t cleared your bank yet and aren’t on your statement, wait to enter them.
5. Most reconciliation modules allow you to check off outstanding checks and deposits listed on the bank statement.
6. For example, you wrote a check for $32, but you recorded it as $23 in your accounting software.

Typically, the difference between the cash book and passbook balance arises due to how to enhance the audit to prevent and detect fraud the items that appear only in the passbook. So it makes sense to record these items in the cash book first in order to determine the adjusted balance of the cash book. Once the adjusted balance of the cash book is worked out, then the bank reconciliation statement can be prepared. The information on your bank statement is the bank’s record of all transactions impacting the company’s bank account during the past month. Compare the ending balance of your accounting records to your bank statement to see if both cash balances match.

Common errors and how to avoid them

You should also compare the figures on your accounts to the figures on the original bank statement. For other types of accounts, QuickBooks opens the Make Payment window. This lets you write a check or enter a bill to pay to cover the outstanding balance. You’ll want to look at your statement, starting with the first transaction listed and find that same transaction in the Reconciliation window in QuickBooks. When you select a transaction’s checkbox, you mark it as cleared (tentatively reconciled). When you finish a reconciliation, the cleared transactions become reconciled.

Required Information to Create a Bank Reconciliation Statement

As a result of these direct payments made by the bank on your behalf, the balance as per the passbook would be less than the balance as per the cash book. In this example, we show you how to reconcile a bank or credit card account. At times, you might give standing instructions to your bank to make payments regularly on specific days to third parties, such as insurance premiums, telephone bills, rent, sales taxes, etc. However, there can be situations where your business has overdrafts at the bank, which is when a bank account goes into the negative as a result of excess withdrawals.

Bank Reconciliation: Purpose, Example, and Process

The journal entry goes into a special expense account called Reconciliation Discrepancies. For example, if the payee is wrong, you can click on the transaction to expand the view and then select Edit. If you forgot to enter an opening balance in QuickBooks in the past, don’t worry. If you signed up to try a new way to reconcile in QuickBooks Labs, click here. You’re in the right place to learn about the current QuickBooks reconciliation.

Timing Differences in Recording of Transactions

There could be many reasons why the bank statement does not match up with your accounting records. Remember that transactions that aren’t accounted for in your bank statement won’t be as obvious as bank-only transactions. This is where your accounting software can help you reconcile and keep track of outstanding checks and deposits. Most reconciliation modules allow you to check off outstanding checks and deposits listed on the bank statement. In order to prepare a bank reconciliation statement, you’ll need to obtain both the current and the previous month’s bank statements as well as the cash book. NSF checks are an item to be reconciled when preparing the bank reconciliation statement, because when you deposit a check, often it has already been cleared by the bank.

To ensure that your books are accurate, it’s important to reconcile your bank, credit card and petty cash accounts. Ideally, you should run a reconciliation each time you receive the statement from your bank. The bank may send you a bank statement at the end of each month, each week, or, if your business has a large number of transactions, they may even send one at the end of each day. To reconcile your bank statement with your cash book, you’ll need to ensure that the cash book is complete and make sure that the current month’s bank statement has also been obtained. At times, the balance as per the cash book and passbook may differ due to an error committed by either the bank or an error in the cash book of your company. There are times when your business will deposit a check or draw a bill of exchange discounted with the bank.