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a. Balance as per bank and as per ledger should always be equal. b. There can be differences but there must be a valid reason for the differences.
the true purpose of bank reconciliation is to find the difference between the cash balance on the books and on the bank statement
b. There can be differences but there must be a valid reason for the differences.
b. There can be differences but there must be a valid reason for the differences.
These differences may be for cheques not yet handed over to suppliers, cheques by postponed date issued to suppliers, mony transfered to our account, or charges on the company from the bank.
Bank Reconsilation is the process of ensuring that the balances of two A/c are in agreement. The purpose of Bank Reconsilation is to make sure that the amount going from our a/c is equal to the amont we spent.
Reconciling your bank account transactions with your monthly bank statement is known as a bank reconciliation. The process requires comparing your bank statement with your record of withdrawals, check payments, deposits and financial transfers. Reconciliations help ensure that your balance total is correct, determine what outstanding payments have not cleared and establish any discrepancies. Bank reconciliations can be processed for small businesses and personal checking accounts and savings accounts, or for corporate accounting requirements.
Determining Account Balance
Reconciling your bank account to your checks, withdrawals and deposit records helps establish your true account balance. Your balance statement may not reflect payments that you have made but that have not been deducted from your posted balance. Knowing your true balance is essential for avoiding overdrawing your account and ensuring you have sufficient funds to cover needed withdrawals for bill payments or spending money.
Uncovering Problems
Routine review of your bank account statement allows you to uncover problems. Bank automation and human error can cause transposed numbers, incorrect deposit allocations and other errors that can affect your checking account total. A monthly bank reconciliation ensures that problems are discovered quickly, and routine reviews decrease the time it take to analyze your account. Monthly bank reconciliations can also keep you from missing any deadlines for reporting discrepancies to your bank.
The bank reconciliation is a process by which to compare an entity's book cash
balance with the bank's cash balance as of a given period so as to note any
discrepancies.
To find out the difference between bank balance and the balance as per company ledger
2 .to identify the reason of differences .
To ensure that the balance as per the company bank books and the bank balance are matched and to identify the transactions pending realisation.