What is Bank Reconciliation Statement? How is it prepared? Explain the advantages of preparing a Bank Reconciliation Statement.

Bank reconciliations can help a company to verify that its bank account ending balance per the bank matches the balance on hand per the company general ledger. The process of preparing a bank reconciliation involves making adjustments to the balances in both the bank statement and the company records to confirm that the ending balances match and that every item is properly accounted for. It is important to prepare bank reconciliations timely and on a regular basis (monthly, for example), so if questions regarding bank fees or bank errors arise both the company and the bank can be made aware as soon as possible.

Step 1

Create a spreadsheet template that can be used each month to perform the bank reconciliation. The heading should include the company name, bank name, bank account number, type of bank account, the period covered by the reconciliation and the date the reconciliation was prepared.

Step 2

Record the ending balance per the bank statement. Below the ending balance per the bank statement, create a detailed list of deposits in transit--a deposit that was made but not yet recorded by the bank. For example, if you made a deposit using ___ ______ ___ ________ _____ _________ _______ ___ ____.
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