Bank service charges include regular monthly fees, overdraft fees, returned check fees and credit card processing fees. Bank Service Charges – These are amounts that the bank withdraws from the account as a charge for having the account.Outstanding Checks should be subtracted from the bank side of the reconciliation because they were subtracted from the book balance when the checks were written. Most businesses have a number of outstanding checks at the end of the month. When a check is written it takes a few days to clear. Outstanding Checks – These are checks that have been written by the company but have not yet cleared the bank. Deposits in Transit must be added to the bank side of the reconciliation because they have been added to the book side when the deposits were recorded by the company. We see this a lot with credit card deposits because there is typically a 1-3 day lag in the time the card is processed and when the funds are deposited to the merchant’s account. This occurs because a deposit was submitted after the bank closed for the day or because of lag in electronic deposits. The account holder has recorded the deposit in his records but the bank has not. Deposits in Transit – A deposit in transit is a deposit that has been submitted to the bank but has not get been recorded by the bank.Here is a list of the most common items you’ll encounter when doing a bank reconciliation: There are a number of items that can cause differences between your book and bank balances. When the reconciliation is completed, both balances should match. There are two parts to a bank reconciliation, the book (company) side and the bank side. As we all engage in more automatic and electronic transactions, this is a critically important step to ensure that the cash balance is correct. That’s approximately $135 per adult in the United States! Maybe we should consider going back to writing down all our transactions and balancing our checkbooks! What is a bank reconciliation?Ī bank reconciliation is a monthly process by which we match up the activity on the bank statement to ensure that everything has been recorded in the company’s or individual’s books. consumers paid $32 billion in overdraft fees. Twenty years ago, before debit cards and online banking, there was only one way to keep track of how much money you had in the bank: keep a checkbook and reconcile it.Ĭlearly, online banking has not made us better at managing our bank accounts. For many students, bank reconciliations are a difficult topic because most people don’t do them anymore.
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