Jitasa Nonprofit Blog

How to: Reconcile Your Bank Accounts

Reconciliation refers to the process of ensuring that two sets of records or accounts are in agreement. Put simply, you are verifying that what you think you have in your bank account is what you actually have in your bank account. 

The simplest reason for completing reconciliation is the human component of accounting, which makes errors inevitable. Reconciling your bank accounts offers a layer of protection against loss prevention, and is crucial to ensuring the accuracy of your financial reports. To completely benefit from it, you should reconcile your accounts monthly. 

How to Reconcile

  1. To reconcile bank statements you match the transaction on the bank statements to the transaction in your accounting records. 
  2. You will need to disregard outstanding items that have not yet cleared the bank, such as deposits in transit. 
  3. To reconcile you will start by taking the bank statement and going to your account to compare the two. 
  4. Mark off the transactions one by one to ensure the balances match. The adjusted totals should be the same. Be sure to prepare appropriate journal corrections and adjustments (interest, outstanding deposits). 
Helpful Tips

  • Identify missing checks: is a cleared check missing from the cash general ledger? Determine if the check is incorrectly dated in your system, perhaps dated earlier or later in the month you are reconciling. Does the check need to be voided?
  • Identify missing deposits: does the bank list a deposit not on the cash general ledger? Does the cash general ledger list a deposit not on the bank statement? Identify and determine correct steps.
  • Identify incomplete journals or other transactions entered to cash and not reflected on the bank statement. Is there an error? Does a correcting journal entry need to be prepared and entered.
  • Look for bank errors. Look for checks or deposit amounts that vary from your records. 
How to Reconcile in Quickbooks:

Reconciling bank statements is made easier by using QuickBooks. You can easily reconcile bank statements by going to: 

  1. Go to Banking  
  2. Select More 
  3. Choose Reconcile
  4. Next, select the account to reconcile
  5. Then, Enter the bank statement date, the beginning balance for that date, the ending balance per the bank statement, and any other needed information. 
  6. One by one check off the transaction by clicking on the corresponding boxes. 
  7. At the bottom of the screen there is a running total of the items you have checked off, those have been reconciled. 
  8. To complete the reconciliation, make sure the difference at the bottom of the screen is zero and click finish now. 
Extra Credit: 

To view this process live, check out this video from Kesha Diaz 

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