What Is Involved in Reconciling a Bank Statement?
Banks provide a monthly paper statement, even with the popularity of online banking. Simple addition, subtraction and some comprehension of how banking works are involved in balancing a checkbook to the penny. The Ouachita Baptist University website points out that if you do not reconcile a bank statement, you trust the bank with your money -- and it makes errors occasionally.
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Considerations
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Banks often have fees for maintaining the account or charges for checks. Some banks pay interest on a checking account so there may be additions and subtractions from the numbers that you do not have in your check register. Before starting to reconcile a bank statement, use the balance from the checkbook; add the credits and subtract the fees.
History
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Balancing a checkbook involves a recorded transaction history. Keep a check register or roster of banking activity from month to month. Save receipts for ATM transfers or debit card transactions and list them in the check register. Save deposit slips in your check register or write deposits in the register. This helps with record keeping at the end of the year for income taxes as well.
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Significance
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Reconcile a checking account so you have an accurate record of the amount of money in the account. Reconciliation involves checking off each check that has gone through the bank account by comparing the check register with the bank statement. With paper-free banking, there are electronic checks and electronic transfers to deal with. These entries may be in a separate section than the paper checks on the bank statement, and reconciliation involves checking them off, too. Record ATM deposits or withdrawals and debit card purchases.
Function
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The front of the bank statement has an "ending balance." Use this figure to balance the checkbook by writing it in the blank on the back of the statement or somewhere on the front. Add all deposits made after the bank statement was printed that are not on the bank statement. These are "deposits in transit," according to Jacksonville State University College of Commerce. Subtract the total of all checks that have not come through the account. The figure in the check register should now match the bank statement ending balance. Simplified by the Money Instructor website, this is the bank account statement ending balance plus deposits in transit, minus checks outstanding, and it equals the ending balance in the check register.
Comparison
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If the figure in the check register does not match the bank statement ending balance, there may be a mathematical error in the subtraction in the check register. Start with the number of the first check for this bank statement and locate it in the check register. Run a tape or subtract with a calculator to find the error from this check number through to the end of the statement. Check figures throughout the subtraction process. If the number you are off is divisible by nine, you may have a transposed number, suggests the University of California-San Diego website.
Correction
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When you locate the error or establish the correct balance for the checking account, make a correction at the end of the check register entries so the starting balance is correct to start the next month.
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