Category Archives: Bank Rec

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Proforma Bank Reconciliation

Balance per cash book
less any bank payments
plus any bank receipts
Corrected cashbook:

less any cheques paid in but not cleared
plus any cheques drawn (paid out) but not cleared
Balance per bank statement:

Note that this is only one way of laying out a bank statement.  With the advent of accounting software, a written bank reconciliation such as this is sometimes unnecessary, as bank reconciliations are semi-automated (or completely automated if the software links to the business’s online banking facility

Things to look out for when doing a bank reconciliation

The company’s cash book may require the following adjustments:

  • direct debit payments and standing orders directly to or from the bank account may not have been entered into the cash book
  • bank interest and charges may not have been entered into the cash book.

Items which may have been included in the cash book but which may not yet have been included in a bank statement:

  • cheques drawn (paid) by the business may not have cleared the bank account
  • cheques deposited into the bank account may not have cleared.

Why do a Bank Reconciliation

The point of carrying out a bank reconciliation is to check that nothing has been missed from the business’s records and also to ensure that there have been no bank errors.

A business’s cash book will rarely agree to the bank statement and it can be easy to miss transactions, such as direct debit payments if a bank reconciliation is not done.  Similarly, banks sometimes make errors too which may otherwise go unnoticed.

Bank reconciliation is a standard part of bookkeeping.  If you have not done a bank reconciliation as part of your bookkeeping, your accountant’s fees will almost certainly be much higher.  Many accountants will insist on a bank reconciliation having been done prior to their doing your statutory accounts.

What is a Bank Reconciliation

A bank reconciliation is simply a checking exercise to ensure that the business can “agree” their records to the balance on their bank statement.

It is normally done each time a bank statement is received.  (It is possible, but highly inadvisable to leave it until the year end)