Reconciliation of bank accounts

(Accountants on Time) Bank reconciliations confirm that you have recorded all transactions in your accounting records, that all deposits have made it to the bank, and that all the checks you have written have been cashed. By performing bank reconciliations regularly you can also be more confident that you will not issue Not-Sufficient-Funds ("NSF") checks to suppliers, vendors, creditors or employees. This will keep your relationships in good order and keep you out of trouble with the authorities knowing that your payroll withholdings check cleared the bank. (Full Service CPA Firms for Small Businesses)

(Accounting Firms Servicing Small Businesses) As an example of an organization that fails to prepare bank reconciliations, suppose a company had over $150,000 of revenues that were not recorded in the statements and over $200,000 of expenses that likewise were not recorded. This entity will have had a net loss of $50,000 that was not recorded in the accounting records and their decision-making ability will have been severely compromised as a result. (Small Business Accounting Firms)

(Full Service CPA Accounting Firms) If your general ledger Cash account is not up-to-date, it is easy to make errors in tracking what the actual cash situation is because of time lapses between when a check is written and when it is cashed and when a deposit is received and when it is placed in the bank. These types of transactions are called outstanding deposits and outstanding checks and are hard to keep mental track of particularly when there is a large number of them. (Accounting For Small Businesses)

Accountants on Time, Full Service CPA Firms for Small Businesses, Accounting Firms Servicing Small Businesses, Small Business Accounting Firms, Full Service CPA Accounting Firms, Accounting For Small Businesses: