The Haryana Labour Welfare Fund
March 1, 2024
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When performing a bank reconciliation, we contrast the bank’s statement with the business’s accounting records. Typically, we follow these steps in the bank reconciliation process:
1-Gather Documents: Collect the bank statement for the relevant period and the company’s own accounting records, including the cash account ledger.
2-Identify Discrepancies: We search for discrepancies in the company’s records and the bank statement. Outstanding checks, deposits in transit, bank errors, and disparities in transaction records are examples of common inconsistencies.
3-Reconcile Balances: After making adjustments, reconcile the ending balance on the bank statement with the ending balance in the company’s cash account ledger. The goal is to ensure that both balances match, accounting for any reconciling items
4-Investigate Discrepancies: Should any notable disparities arise that defy simple explanation, additional research may be necessary. This can entail getting in touch with the bank to ask questions about specific transactions or checking internal accounting procedures to look for possible mistakes.
5-Compare Transactions: Go through each transaction listed on the bank statement and compare it with the transactions recorded in the company’s books. This includes deposits, withdrawals, checks issued, electronic transfers, service fees, interest earned, etc.
6-Adjustments: Modify the company’s documentation to reflect any discrepancies discovered throughout the reconciliation procedure. For instance, the company’s records must reflect any outstanding checks or deposits that are in transit.
7-Prepare Reconciliation Report: Document the reconciliation process and its results in a bank reconciliation report. This report typically includes the beginning and ending balances, a list of reconciling items, adjustments made, and the final reconciled balance.
8-Approval and Documentation: After the reconciliation is finished, the accountant might need to obtain approval from the relevant company staff. In order to comply with audit requirements, we also make sure that all paperwork pertaining to the reconciliation process is correctly filed.
In order to verify that a company’s financial records are accurate and to identify any inconsistencies or mistakes that may need to be fixed, bank reconciliation is an essential procedure.
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