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How to prepare a bank reconciliation?

How to prepare a bank reconciliation? The point of preparing a bank reconciliation is to reconcile the cash per bank statement to the cash balance per books (i.e. accounting records). There are a number of reconciling items, and its important that the accounting team always understands how to reconcile cash.

Cash balance per bank: When you received the bank statement from the bank, there is an ending bank balance, and that becomes your starting point. You then need to add deposits in transit and then subtract any outstanding checks.

Cash balance per books: The cash balance per books will likely not include items that the bank has responsibility for, such as interest income, cash collections directly by bank (i.e. lockbox), nonsufficient funds, and any monthly service charges.

In order for a bank reconciliation to be complete, the adjusted cash balance must equal the adjusted book balance.


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