Bookkeeping Reconciling Accounts

One of the most basic bookkeeping tasks you will need to do is reconcile your bank, savings and credit card accounts by matching up your transactions to the banks’ statements. Each account needs to be reconciled once a month. You need to start at the beginning, with the first statement after you opened the particular account and then do them in month order thereafter.

When you open up the reconcile window, you will set the ending date the same date as your statement ending date. Then you will add the ending balance on that date from your bank statement. Take note of the beginning balance on your statement and check if it matches the beginning balance in the reconcile window. It should always match unless you have made a mistake on a prior reconciliation. If the option exists in your software, you can hide the transactions that fall after your statement date, just so there aren’t so many crowding your view. If there is a service charge or interest earned, there are spaces to enter that information in the reconcile window.

Now you will click on and check off each transaction that you see on your statement. You will see checks and debit card transactions on one side and deposits and credit transactions on the other side in your bookkeeping software. Visually take note that the amounts match exactly along with check numbers. When, not if, you find errors, don’t check off those transactions yet. You will be able to back out of the reconciliation process and go make corrections first. Then come back to reconciling and check them off. Sometimes you will get the check numbers out of order. Or the amount of a transaction could be wrong. Or a transaction was not recorded at all and you’ll need to track it down and enter it in your books.

After you have cleared every transaction on your statement, the difference will be zero. The software calculates that for you. When it is zero, you can save it or click ok. If you wish you can print a reconciliation report and a register report for that month to file with your bank statement.

If you need to back out and make some corrections, you can click ok or leave, depending on your software. Go make the corrections and then start reconciling again. Your prior work will be saved so you don’t have to start the entire process over. Just start from where you left off and complete the process as noted above.

The same process is used to reconcile credit card and savings accounts. Usually I see a lot of credit card transactions that I have not already entered for things like subscriptions or other recurring charges. If you need to, ask the person who has the credit card for clarification on any charges so that you know what they were for. I will do a visual inspection of that account to see that all the credit card charges are in the books before I try to reconcile, for that very reason. In the case where there are multiple people charging on the same credit card account, I will give them a copy of the statement so they can mark it up with what they purchased. Generally, each card has its own section on the statement. When they return those copies to me, I enter their transactions before I attempt to reconcile it. It prevents a lot of back and forth in the process.