What is bank reconciliation
Bank reconciliation is a term used to describe the difference between two balances. With regards to banking, bank reconciliation enables an individual to compare their personal bank account records with that of the bank’s records, in order to reveal any potential discrepancies.
DeltaQuest can assist you with opening a bank account in the location of your choice. To learn more, please Contact Us.
Bank reconciliation defined
Bank reconciliation is a procedure carried out by a bank account holder to ascertain whether the bank balance that appears on their personal records matches that of the bank’s data of that client. This is done by obtaining a special form that outlines this information in detail.
The purpose of bank reconciliation is to ensure that, should a discrepancy arise, the reason for the inconsistency is elucidated. A bank reconciliation outlines in detail the reasons why a customer’s bank balance (as shown on personal bank account records) might differ from the bank’s records of the individual’s account balance.
There are a number of reasons why discrepancies may occur in the above two comparisons. Reasons for discrepancies can be the responsibility of either the bank or of an organization that has processed a payment. It can be very easy to reconcile the difference if very recent transactions are compared. Reasons for discrepancies include:
- A cheque issued that has not yet been presented to the bank
- A banking transaction or charge that has been processed by the bank has not yet been recorded in the organization’s books
- An error has occurred that is the responsibility of either the bank or the organization itself
If it is deemed impossible to rectify a discrepancy by comparison of recent transactions, then it may be necessary to go through the entire set of records since the last reconciliation to see where the transactions became unmatched. The necessary adjustments should then be made immediately.
Print This Post
