What are the types of adjustments that should be included in a bank reconciliation?
The purpose of performing a bank reconciliation is to reconcile the balance per bank statement to the balance per books. Its unlikely that these two balances will reconcile without factoring in adjustments.
The visual below outlines what adjustments adjust the bank balance vs which items adjust the book balance:
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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 […]
What is a deposit in transit and why is it included in a bank reconciliation?
A deposit in transit is when the company sends a check or cash to the bank, but as of the end of the month, the bank has not yet processed the receipt of the funds. Therefore, the company’s monthly bank statement excluded the funds, even though they have already recorded the receipt of the funds […]
What is an outstanding check and why is it included in preparing a bank reconciliation?
An outstanding check is a check that has been written by the company and send to a vendor, however, the vendor has not yet received or not yet deposited the check. Since the company mailed the check, they would have credited cash, but the bank would not process the check until the customer deposits the […]