Bank Reconciliations

What are bank reconciliations?

Bank reconciliations are prepared to ensure that the balance in the cash book of a business is reconciled to the balance on the bank statement provided by the bank.

For example, if a business writes a cheque, it will post it to its cash book that day and then send it on to its supplier. The supplier will receive the cheque days later, and send it on to its bank. The cheque then passes through the banking system and eventually, a few more days later, it is processed by the bank of the business and posted to its account (bank statement).

During the period of days between the business posting the cheque and the bank posting the cheque the item is in the cash book not on the bank statement and is therefore a reconciling item to be included on bank reconciliations.

For further information on bank reconciliations see the Wikipedia definition.

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Bank Reconciliations March 23rd, 2016Team

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