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    sumit_goyal34's Avatar
    sumit_goyal34 Posts: 6, Reputation: 1
    New Member
    		  
    #1

    May 15, 2009, 04:27 AM
    Reconciliation of Bank Account.
    Hello Sir/Madam,

    I want to know what is the meaning of Reconciliation of bank account. And why should we reconcile a bank account.

    Thanking you,

    Regards,
    Sumit
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #2

    May 15, 2009, 01:38 PM

    A bank reconcilliation is used to settle differences between your bank statemnt and your organization's cash account on your books. Once the bank reconciliation is completed both your bank balance and your book balance must equal, which indicates that the bank balance and your book balnce is correct.

    You should do a bank reconciliation because there may be items in your bank balance that have not been included in your book balance such as; interest, bank fees, collection on CD's etc. Also you may have made a transposition error in recording deposits or on checks.
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
    Ultra Member
    		  
    #3

    May 15, 2009, 09:03 PM

    Here we got two perspectives:-

    1) The BANK'S books, and
    2) The FIRM'S books.

    At any time the balances on these two
    Different books may differ.
    By means of a reconciliation they should be
    Brought into equilibrium.
    The differences are mostly due to a lag in time between them.
    Once you update both with all the knowledge
    Available you make them balance or
    RECONCILE.
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