Bank reconciliation explained
Your books and your bank see the same money from different sides. A check you wrote on the 29th is in your books the day you write it, but the bank only sees it when it clears. A monthly service fee is on the bank statement before anyone records it. Reconciling finds those differences and explains every one of them, so the cash balance in your books is one you can trust.
You start from the statement’s ending balance, add deposits the bank hasn’t received yet (deposits in transit) and subtract checks that haven’t cleared (outstanding checks). Then you take the balance in your books and record anything the bank already knows about and you don’t, such as fees, interest or a payment you forgot. When the two adjusted balances agree, the period is reconciled.
A difference that won’t go away usually means a transaction was recorded twice, recorded with the wrong amount, or not recorded at all. Credit cards are reconciled the same way, statement by statement.
Example: reconciling a checking account for March
The March statement ends at $12,480.00. The books show $12,060.00.
| Amount | |
|---|---|
| Bank statement ending balance | $12,480.00 |
| Add: deposit in transit (March 31) | + $205.00 |
| Less: outstanding check #1042 | − $650.00 |
| Adjusted bank balance | $12,035.00 |
| Balance in the books | $12,060.00 |
| Less: bank service fee not yet recorded | − $25.00 |
| Adjusted book balance | $12,035.00 |
Both sides show $12,035.00. Record the $25 fee in the books and March is reconciled; the deposit and the check will clear in April.
Where you’ll see it in fiscal50
fiscal50 reconciles bank accounts month by month, credit cards statement by statement and loans period by period. With auto-reconciliation, it predicts each period’s ending balance from your books and checks it against the bank before anything is marked reconciled. When they agree, it clears the matching transactions and moves on to the next period; when they don’t, it stops and shows why.
You can also reconcile any period yourself: enter the statement balance, review what cleared, and complete it when the Difference is 0. A month can’t be closed until every bank and card account is reconciled for it.
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