BANK RECONCILIATION

A company's general ledger account cash contains a record of the transactions (checks writen, receipt from customers etc) that involve its checking account. The bank also creartes a record of the companys checking account when it processes the companys checks, depositrs, service charges and other items. Soon after each month ends the bank usually mails a bank statement to the company. The bank statement lists the activity in the bank acount during the recent month as well as the balnces in the bank account.

When the company receives its bank statement, the company shouid verify that the amounts on the bank statement are consistent or compitable with the amounts in the companys Cash account in its Generel Ledger and vice versa. This process of confirming the amounts is referred to as "RECONSILING THE BANK STATEMENT, BANK STATEMENT RECONCILIATION, BANK RECONCILIATION, or doing Bank.rec" The benefit of reconciling the bank statement is knowing that the amount of cash reported by the company is consistent with the amount of cash shown in the bank's records.

After you adjust the balance per bank to be the true balance and after you adjust the balance per books to also be the same true balance, you have reconsiled the bank statements. Most accountants wouid sinply say that you have done the bank reconciliation or the bank rec.