A bank reconciliation statement is a tool that is used on a periodic basis to ensure that the company’s cash balances are correct. They can also be a good auditing tool to help detect cash manipulations and fraud. They are also useful in detecting if any accounting changes are needed. Download this free bank reconciliation statement template to start matching your company's cash balance on the balance sheet to the amount on its bank statement. There are a few differences between the bank statement and the accounting record of a company, causing the cash balances on the two sides to rarely be the same. Things such as deposits in transit (cash and checks received but have not been recorded on the bank statement), outstanding checks, bank service fees, and interest income are the most common reasons for the discrepancies in cash balances.
Bank Reconciliation ProcedureBelow are the steps to reconciliating a company's cash balance using this Bank Reconciliation Statement Template:
- On the bank statement, compare the company’s list of issued checks and deposits to the checks shown on the statement to identify uncleared checks and deposits in transit.
- Using the cash balance shown on the bank statement, add back any deposits in transit.
- Deduct any outstanding checks.
- This will provide the adjusted bank cash balance.
- Next, use the company’s ending cash balance, add any interest earned and notes receivable amount.
- Deduct any bank service fees, penalties, and NSF checks. This will arrive at the adjusted company cash balance.
- After reconciliation, the adjusted bank balance should match with the company’s ending adjusted cash balance.
Learn More on This TopicRead CFI's guide on bank reconciliation to understand the difference between bank statement and company's accounting record, recap the whole procedure, and go through an example to learn how to construct the bank reconciliation statement!