How to Reconcile a Bank Statement – And Catch Mistakes

How to Reconcile a Bank Statement – And Catch Mistakes

What is a bank statement?

A bank statement is a record sent to the account holder once a month, and it summarizes the transactions that took place since the previous statement to the current one. The current statement reaches the closing balance when the opening balance from the previous period is combined with all the transactions in the given time frame.

Every bank statement should be carefully reviewed and kept for future reference. While reconciling bank statements (the transactions with the bank’s records), account holders are strongly advised to be extremely careful and watch out for incorrect calculations and unauthorized transactions. Reconciling a bank statement should be done meticulously, like working out a mortgage broker business plan.

What is bank statement reconciliation?

Bank statement reconciliation is a way of reviewing the income and expenses and comparing the bank record with the record in the checkbook. Bank statement reconciliations should be done on a monthly basis, because the whole process offers the opportunity of identifying potential mistakes or fraudulent activity that has happened to the account during the month. The reconciliation is also good for finding out about transactions that have been authorized, but that have not yet cleared the account.

Here are several steps in which one can successfully reconcile a bank statement:

  • Familiarizing with the bank statement. This step is essential, because it is a way of checking the beginning and ending balance, deposit section and all the checks that have been written during the month.
  • Adding all check register deposits to the bank statement. The checks should all correspond to the same period, and the total deposits in the register should equal the bank statement deposits.
  • Comparing each of the checks in the register with those on the bank statement. This is easily done by placing a check mark next to the number on the register, to confirm that the bank has cashed the check.
  • Comparing all electronic payments and transactions from the statement with the information in the register. If there are any missing ones, the bank should be contacted immediately.
  • Getting all uncashed checks and pending withdrawals together. It is generally a good idea to make a note of the total.
  • Reconciling the balances; all pending withdrawals should be subtracted from the ending balance. If the bank statement and check register account for all the items, the balance should equal zero.

Additional advice

Anyone reconciling their bank statement is strongly advised to pay attention to the process. The last thing that should happen is an error that slips up; it could turn the whole thing into a mess and create additional problems. If the end number does not match the register, a mistake has definitely been made.

Consumers are strongly advised to check for fake bank statements, because there are many illegal services offering this kind of financial “aid”. A fake bank statement can create a ton of problems and put one’s reputation in question.

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