What is the meaning of bank reconciliation?

[Mataracy]

To every company or business owners sometime do have one problem or the other with the bank when its come to the issue of lodging in money in to the bank and after sometime they find it difficult to relate the statement they have at hand with the bank statement.

It is a usual doing that,the money paid in to or withdrawn from a bank account are entered in the cash book at one point in time while the bank will Aldo make the necessary entries in their books at another point in time. So, the cash balance at any point in time will different from the balance as shown in the bank books.

The bank normally send bank statements with them to the depositor from time to time. The entries in the cash book appears on the opposite side of the bank statement,the reason is that from the depositor point of view cash is an asset and all increases should be debited an all decreases credited.However, from the banks point of view,the depositor as a creditor,so any increase in the account should be credited and decrease debited.

A bank reconciliation statement therefore is normally prepared to reconcile or bring in to agreement the balances on the cash book and the bank statement.

PURPOSE OF BANK RECONCILIATION STATRMENTS
(1) To ensure that the differences on the books are due mainly to time difference in entering the items.

(2) To show up- dated or true cash balance of the firm.

What did you understand by bank reconciliation?

 

[Augusta]

I learned this in my accounting class way back and I think it is a good idea to always reconcile your bank statement from your bank and the balance you also have in your cash book. as you have stated it is always good for a business to know its true balances per month.

 

[Alexandoy]

In college we had discussed the bank reconciliation in our finance subject. It is very clear to me that the procedure is just to clarify the balances of the bank versus the books of the depositor. It is all about the use of checks so the crucial point is the checks in transit which is not reflected yet on the books of the bank.

 

[alexlama]

Indeed, normally the bank sends bank statements with them to the Depositor from time to time. The entries in the cash book appear on the opposite side of the bank statement, the reason is that, from the Depositor's point of view, cash is an asset and all increases should be debited and all decreases credited. And in order for everything to be even simpler you can use some platform through which to carry out the entire accounting and absolutely all taxes, taxes and salaries to be paid on time. Something similar My firms have built on ThePayStubs, it is simple and safe.

 

[Crystalworld02]

To every company or business owners sometime do have one problem or the other with the bank when its come to the issue of lodging in money in to the bank and after sometime they find it difficult to relate the statement they have at hand with the bank statement.

It is a usual doing that,the money paid in to or withdrawn from a bank account are entered in the cash book at one point in time while the bank will Aldo make the necessary entries in their books at another point in time. So, the cash balance at any point in time will different from the balance as shown in the bank books.

The bank normally send bank statements with them to the depositor from time to time. The entries in the cash book appears on the opposite side of the bank statement,the reason is that from the depositor point of view cash is an asset and all increases should be debited an all decreases credited.However, from the banks point of view,the depositor as a creditor,so any increase in the account should be credited and decrease debited.

A bank reconciliation statement therefore is normally prepared to reconcile or bring in to agreement the balances on the cash book and the bank statement.

PURPOSE OF BANK RECONCILIATION STATRMENTS
(1) To ensure that the differences on the books are due mainly to time difference in entering the items.

(2) To show up- dated or true cash balance of the firm.

What did you understand by bank reconciliation?

This is a very sensitive topic in every standard organisation. It very important for organisations to inculcate this system into their mode of operation inorder to have a kind of check and balance of their operations.

 

[Suba]

The main function of bank reconciliation is to compare cash records with bank records, if there are differences, adjustments must be made in the cash ledger immediately. Bank reconciliation will be carried out periodically to detect any manipulation or fraud of money in the company. So that the bank reconciliation also serves as evidence of the validity of cash records,

 

[Mataracy]

The main function of bank reconciliation is to compare cash records with bank records, if there are differences, adjustments must be made in the cash ledger immediately. Bank reconciliation will be carried out periodically to detect any manipulation or fraud of money in the company. So that the bank reconciliation also serves as evidence of the validity of cash records,

You are correct. Bank reconciliation help the company to verify may be there is difference between bank statement from bank cash book and company cash book.
This is also help to detect any error that might have occur during transaction between bank and company. So most Auditors make good use of the method to detect any error or fraud committed on the company.