How to Balance a Bank Reconciliation

Posted by: Patricia Barlow Post Date: 26th February 2015

Whether you are completing a manual bank reconciliation or a computerised bank reconciliation, it’s very satisfying when it works, and everything balances. But what do you do if it doesn’t balance?

If you find yourself with a mismatch, just work through these three simple steps.

Step 1: Check the opening position

How to Balance a Bank Reconciliation

Does the opening balance on the bank statement match with the opening balance on the cashbook? If it does, move to step 2.

If it doesn’t, then what is the difference? You need to see if the difference is an unreconciled item from the last bank reconciliation. Any issues with a previous reconciliation need to be resolved before you can move on.

Step 2: Tick the bank off again

Next, you need to work through the bank statement, ticking the items as they match to the cashbook. If no mistakes are found, go to step 3.

If mistakes are found, these need to be rectified, depending on what the mistake is.

Entries can be made in the cashbook at the wrong amount, entered in the cashbook on the wrong side, or even not entered into the cashbook at all. You need to work out which of these has occurred, and correct the mistakes.

Step 3: Check your reconciliation again

Check that you have brought through the closing balance as per the bank statement. Have you added to that balance any receipts that are in the cashbook, but not gone into the bank yet? Have you deducted from that balance any payments that are in the cashbook, but not out of the bank yet?

Once you have completed all of these steps, the bank should balance. If not, then you need to go back to step 1.

If bank reconciliations are a part of your role, or you need to do them for your own business, it’s a good idea to complete a basic accounting qualification, such as AAT level 2 Foundation Certificate.

Want to become a qualified bookkeeper or accountant?

Get in touch below to find out how, or call us on
01332 613 688

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