Using cloud accounting software, like Quickbooks, makes preparing a reconciliation statement easy. Because your bank account gets integrated with your online accounting software, all your bank transactions will get updated automatically and each item will be matched with your books of accounts. Connect QuickBooks to your bank, credit cards, PayPal, Square, and more1 and we’ll import your transactions for you. When you receive your bank statement or account statement at the end of the month, you’ll only spend a minute or two reconciling your accounts. QuickBooks organizes your data for you, making bank reconciliation easy. You’ll need a few items to perform a bank reconciliation, including your bank statement, internal accounting records, and a record of any pending cash transactions (either inflows or outflows).

1. 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.
2. The purpose of preparing a bank reconciliation statement is to reconcile the difference between the balance as per the cash book and the balance as per the passbook.
3. QuickBooks organizes your data for you, making bank reconciliation easy.
4. Therefore, such adjustment procedures help in determining the balance as per the bank that will go into the balance sheet.
5. If everything matches, you know your accounts are balanced and accurate.

Step 2: Selecting the Account to Reconcile

After adjusting all the above items what you’ll get is the adjusted balance of the cash book. 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. Keeping your financial records in order is hugely important to the success of your business.

Match your transactions

Once you’ve completed the balance as per the bank, you’ll then need to work out the balance as per the cash book. 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. Give your accountant direct access to your books so she can find the reports and information she needs when questions arise. Create a separate login for your accountant to make it easy for her to work with you. You can exchange messages and share documents directly inside QuickBooks, too. Below, we delve into a detailed explanation of the account reconciliation process within QuickBooks.

Reconciling a bank statement is an important step to ensuring the accuracy of your financial data. To reconcile bank statements, carefully match transactions on the bank statement to the transactions in your accounting records. With QuickBooks, you can easily reconcile bank accounts to ensure that the dollars you record are consistent with the dollars reported by the bank. In the absence of proper bank reconciliation, the cash balances in your bank accounts could be much lower than expected, which may result in bounced checks or overdraft fees.

Step 5: Record All Adjustments As Per Cash Book Into Your Company’s General Ledger Cash Account

Reconciling bank statements with cash book balances helps your business know the underlying causes of these balance differences. Once the underlying cause of the difference between the cash book balance and the passbook balance is determined, you can then make the necessary corrections in your books to ensure accuracy. 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. When you have your bank statement in hand, you’ll compare each transaction with the ones entered into QuickBooks. We recommend reconciling your checking, savings, and credit card accounts what are audit assertions and why they are important every month.

Therefore, such adjustment procedures help in determining the balance as per the bank that will go into the balance sheet. Not-sufficient funds (NSF) refers to a situation when your bank does not honour a check, because the current account, on which the check is drawn, has insufficient funds. We know that taking hours to find amounts that are off by a few pennies doesn’t make sense. In QuickBooks, you have the option to make an adjusting entry if the difference isn’t zero when you are finished reconciling. However, adjusting entries should be made only as a last resort for small amounts.

When all these adjustments have been made to the books of accounts, the balance as per the cash book must match that of the passbook. If both the balances are equal, it means the bank reconciliation statement has been prepared correctly. While reconciling your books of accounts with the bank statements at the end of the accounting period, you might observe certain differences between bank statements and ledger accounts. If this occurs, you simply need to make a note indicating the reasons for the discrepancy between your bank statement and cash book.

QuickBooks processes the payment and transfers the money to your bank account. There’s even a mobile card reader so you can swipe or dip the card from your phone or tablet. Just like balancing your checkbook, you need to review your accounts in QuickBooks to make sure they match your bank and credit card statements.

If you’re not careful, your business checking account could be subject to overdraft fees. If you’re reconciling an account for the first time, review the opening balance. It needs to match the balance of your real-life bank account for the day you decided to start tracking transactions in QuickBooks. There are times when the bank may charge a fee for maintaining your account, which will typically be deducted automatically from your account. Therefore, when preparing a bank reconciliation statement you must account for any fees deducted from your account. Make sure that you’ve also taken into account all deposits and withdrawals to an account when preparing the bank reconciliation statement.