Bank reconciliation // accounting practice to organize bank cash

in #business6 years ago (edited)

Hello friends of steemit, today I want to share with you one of the accounting tasks, perhaps more cumbersome or tedious, that must be executed monthly, so that your cash in bank, either from your company or from your personal account, is handled in a efficient. Facilitating with this a continuous and timely control, minimizing the errors in the mercantile transactions; making your accounting life, both entrepreneurial and personally efficient and effective. With all the above I refer to the call BANK CONCILIATION.

To express a definition of bank reconciliation, we have: it is a technique, practice or accounting procedure that is applied to compare the records or economic movements of the account called bank (current account or savings) of the company, against departure with the movements reflected in the account statement issued by the bank, which maintains financial relationships with the company.

Now, to continue with the development of this topic it is necessary to briefly define certain terms, such as: must, have, balance, charge, debit, credit, credit, active and passive; considering them basic to understand the outline of a bank reconciliation.

Just to remember, we say that accounting is considered a science, art or technique, whose function is to collect, summarize and record all transactions or business transactions, which is executed or carried out by a company or organization with another entity, natural or legal , in financial terms, in order to show their dynamic or static movements, through the financial statements, allowing to make sound decisions in the administration of assets. All this must be executed under strict procedures and rules, reflected in accounting, principal and auxiliary books.


Books that its structure or design is composed of columns and rows, whether physical or electronic, where each of them has a nomenclature of names, already determined at national and international level; hence the terminology that is referred to in the previous paragraphs (which we will limit ourselves to describing those mentioned).

MUST: name of the left column of the ledger, where the charges of the holder are registered, in reference to the ACCOUNT.

HABER: name of the central column between the DEBE and the BALANCE, in the accounting book, where the credits of the holder are registered, in reference to the ACCOUNT.

BALANCE: name of the right column of the ledger, where the balances of the ACCOUNT are recorded in reference to the holder.

CHARGE AND DEBIT: are synonyms that mean to register or make an entry (number of numbers), in the column of the DEBE of the accounting book. It is also correct to say load or debit, since it means the foregoing.

CREDIT AND FERTILIZER: are synonyms that mean to record or make an entry (number of numbers), in the HABER column of the ledger. It is also correct to say pay or credit, since it means the above.

ACTIVE: simply are all the assets and rights that a company owns and that must come from a past event, be in the domain of the company and promise a future benefit. Example: cash, vehicle, machinery and many more.

PASSIVE: Briefly, it can be defined as the duties and obligations that the company has with third parties, contracted in the past, are in full responsibility and can be finalized in the future. Example: bank loans, mortgages, debts to suppliers, among others.

Once we have defined these terms, we continue with our address about the bank reconciliation. As we said, it was a question of comparing the company's accounting with the records issued by the bank, for this the support of the main ledger or the auxiliary book of the bank account of the company is required, as well as the statement of account issued by the financial entity and all the commercial documents alluding to the case, either by the company and / or the financial institution in question. Bank reconciliation must be carried out on a strict monthly basis, considering the methodology that will be used in this regard, that is, the type of method that will be applied.

Types of methods used to perform a bank reconciliation:

1.- Method of balances found: this method is very abstract and ill-advised, since it starts by taking the final balance, either the one that owns the book of the company or the one that reflects the issued statement of account by the bank, and it is assumed that many facts did not happen, to reach or equal the other balance not chosen, that is, if we take the final balance of our book of the company, once applied all the procedure demanded by the method , we must achieve our result equal to the final balance reflected in the statement of account issued by the financial institution and vice versa.

2.- Method of the correct balances: it is the precise, advisable and accepted method in legal claims before financial entities, at least in our country Venezuela. It consists of taking the final balance held by the company's book, applying the procedures demanded by the method, in order to obtain the correct balance of the bank account (new balance). In parallel, the same procedure should be performed with the final balance reflected in the statement issued by the financial institution, thus obtaining the correct balance, which must be equal to that obtained with the procedure applied to the balance of the book of the company.

3.- 4-column method: This method is perhaps the simplest and consists of emptying the result of the comparison between the company's records and the statement of account issued by the financial institution, in a 4-column format , where the DEBE and HAVE of the company and the MUST and HAVE of the bank are located, recording the corrective and ignored facts by both entities respectively, thus obtaining the correct balance in both.

To carry out the bank reconciliation under this method, the following aspects are considered:

• All deposits in transit will be registered by the credit of the bank.

• All checks in transit will be recorded by the debit of the bank
.
• All third-party deposits that the bank credits in our account will be registered by the debit of the bank.

• All third-party checks that the bank charges in our account will be recorded by the bank's credit.

• All foreign deposits charged by the company's accountant in our books will be recorded by the company's credit.

• All third-party checks credited by the company's accountant in our books will be recorded by the debit of the company.

• All the credit notes that appear in the bank's account statement and that have not yet been recorded in our books will be recorded by the debit of the company.

• All debit notes that appear in the bank's account statement and that have not yet been recorded in our books will be recorded by the company's credit.

• When the company mistakenly registers a check for an amount less than the true amount, the difference between the amounts will be recorded for the credit of the company.

• When the company mistakenly registers a check for an amount greater than the true amount, the difference between the amounts will be recorded by the debit of the company.

• When the company mistakenly registers a deposit for an amount less than the true amount, the difference between the amounts will be recorded by the debit of the company.

• When the company mistakenly registers a deposit for an amount greater than the true amount, the difference between the amounts will be recorded by the company's credit.

• When the bank charges a check to our account for an amount less than the true amount of the check, the difference will be recorded by the debit of the bank.

• When the bank charges a check to our account for an amount greater than the true amount of the check, the difference will be recorded by the bank's credit.

• When the bank credits a deposit to our account for an amount less than the true amount of the deposit, the difference will be recorded by the credit of the bank.

• When the bank credits a deposit to our account for an amount greater than the true amount of the deposit, the difference will be recorded by the debit of the bank.

• The checks deposited by the company in your account and that are subsequently returned by the bank for not having funds, must be registered in the credit of the company.

It is important to highlight that the bank account for the company is an asset, but that same account for the financial institution is a liability.

See you soon ... @ yonglerosales

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Thank you for giving us such an excellent publication @ yonglerosales. Very important when reconciling account statements within a bank

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