Bank Reconciliation
- zwaller1
- May 1, 2013
- 1 min read
1. What is Bank Reconciliation?
Bank Reconciliation or Bank Recon as is widely termed is an accounting method that compares checks written and payments made against checks cashed and fees charged on a bank statement. It gives bank customers an accurate picture of their current bank accounts and is a vital tool for personal and business money management.
2. Why Bank Reconciliation (BRS) is required?
The need to do BRS is to validate the correctness of the bank statements and to derive any differences existing between the bank statement and your cash book.
3. What is the importance of Bank Reconcilation?
It is important to go through the process of bank reconciliation. Non reconciled accounts may lead to various risks. There may be chances that one might not be aware of bounced checks and various charges deducted by bank. Due to non reconciliation of bank accounts your PL & BS might not depict an accurate picture.
Without bank reconciliation, you also expose yourself to unwanted forgery. People may be ignorant of theft on your account. If you never look through each transaction, you’ll never know about it. If you don’t notify the bank quickly enough, they can relinquish thier obligation to the fraud.
With electronic check clearing, you do not have much time to process funds into your account when you write checks.
Comments