Many business owners often find themselves looking for templates to import on their excel sheets. Some of these templates are printable while others not so much. Financial templates often show up as images linked to a website. Since these templates are simple screenshots in JPG format, they are not always printable! It is more convenient to download excel sheet templates than to make one. But, what if you could find all the possible accounting templates under one app? However, to use the template one must either be an accountant, student or be provided some sort of manual and background information on these templates. A bank reconciliation statement is one such accounting or financial templates that has many google searches!
A bank reconciliation statement is used to find and list differences between a cash ledger of a business and the monthly bank statement. If all deposits are accurate and to date then the cash ledger should have the same amounts and entries as the bank statement. Since this is not always the case, a monthly bank statement is often prepared! Sometimes errors are made in the cash ledger while other times transactions are not recorded on the bank statement. Examples of items on the bank statement not recorded by the depositor include service charges, collections, payments and so on. Service charges deducted from the bank are usually notified in the form of a debit memorandum. Since these charges do not always show up in the cash ledger account, they are shown on the reconciliation statement instead. Charges for noncollectable or NSF checks deposited in the depositor’s account by a business are often notified by the bank. But, this notification sometimes is late and does not enter the depositor’s cash ledger account at least for that month or until the end of the month. A reconciliation statement is prepared instead. A bank also acts a collection and payment agent notifying the depositor in each case. However, this notification is sometimes late; leading to bank reconciliation statement. Also, fees collected for these payments and collections show up in the bank reconciliation statement rather than cash ledger. Error’s made by the bank also do not often show up in the cash ledger. Hence, a bank reconciliation statement is prepared when items on bank statements are not recorded or up to date on cash ledger.
On the other hand, a bank reconciliation statement is also prepared when items on the cash ledger are not recorded on the bank statement or up to date. Next, outstanding checks that are issued by the depositor do not always show up on the bank statement. Overnight deposits or deposits in transit do not show up on the bank statement. This is especially true if the overnight deposit was on the night of the last day of the month. This will result in late records being transferred to the next month’s bank statement. Also, errors made by the depositor are not included in the bank statement. In all the above cases, a bank reconciliation statement is usually prepared.
When a bank reconciliation statement is finally prepared, there are a number of steps to be taken by a depositor or business owner. Cash ledger accounts and bank statement accounts should be compared to any differences. Deposits in transit or last month’s outstanding amount should be recorded. Differences should be noted on the bank statement and that of debit memorandums and canceled checks. Cash payment journal and canceled checks must be arranged like the NSF checks to mark outstanding and paid amounts. Any outstanding amounts must show on the bank statement. Outstanding checks from this month and last month should be checked and included on the bank reconciliation statement. Credit memorandums that are not reflected in the cash ledger or depositor’s records must be checked. Journal entries are prepared for any debts and credits not recorded on the books of accounts. Finally, a bank reconciliation statement is prepared.
In conclusion, financial templates like that of a bank reconciliation statement with background information may make records and accounting easy for cashiers and small business owners. Since some financial templates even offer editable excel sheet calculators, one may perform calculations on the spot or on the go via their cellphone.
Source: (John R. Cerepack & Brian W. Carpenter, “Reconciling the bank account“)