A company’s general ledger is usually their quickbooks. This contains records of the transactions (checks written, receipts from customers, etc.) that involve its checking account. The bank also creates a record of the company’s checking account when it processes the company’s checks, deposits, service charges, and other items.
When the company receives its bank statement, the company should verify that the amounts on the bank statement are consistent or compatible with the amounts in the company’s Cash account in its general ledger and vice versa. This process of confirming the amounts is referred to as reconciling the bank statement, bank statement reconciliation, bank reconciliation, or doing a “bank rec.” The benefit of reconciling the bank statement is knowing that the amount of Cash reported by the company (company’s books) is consistent with the amount of cash shown in the bank’s records.
Two tips.
- Leave the check number field blank for non-check withdrawals.
Bank statements usually list their non-check withdrawals chronologically. QuickBooks they are listed chronologically if the check number field is blank and then alphanumerically. The order that withdrawals appear in the QuickBooks bank reconciliation window are:
a) Checks with the check number field blank.
b) Checks with text like “Wire” or “Transfer” in the check number field are sorted alphabetically.
c) Checks with a number in the check number field.
2. Make all deposits through Undeposited Funds
When all deposits are made through Undeposited Funds, groups of payments made on the same day match exactly what is on the bank deposit slip for that day. Therefore the amount that appears in the deposit list of the QuickBooks reconciliation window will equal what appears on the bank statement.
Some clients engage in an infuriating game of mathematics by adding up multiple deposit amounts in QuickBooks to get an amount identical to that on the bank statement.
