Frequently asked questions
What is a bank reconciliation statement?
A statement explaining the difference between the cash book balance and the bank statement balance on a given date, by listing the items recorded in one but not yet the other.
Why do the cash book and bank statement differ?
Usually timing: cheques issued but not presented, deposits not yet credited, and bank charges or interest not yet recorded in the books. Errors on either side are a less common cause.
How often should a bank reconciliation be done?
Monthly is standard practice. Businesses with high transaction volumes often reconcile weekly.
What if the reconciliation does not tally?
Check for transposed digits (a difference divisible by 9), entries posted on the wrong side (a difference exactly double an entry), duplicates, and entries from the wrong period, before suspecting a bank error.
Does accounting software do reconciliation automatically?
Software matches most entries automatically, but it cannot judge what an unmatched item means or which side is wrong. That decision remains the accountant’s.