The Bank Reconciliation is a tool to make sure that all cash receipts, cash disbursements and adjustments in your account are recorded in the general ledger. This can be used for both Bank and Credit Card reconciliations. You will need your statement for the date range selected in the new reconciliation screen to perform this exercise. In the reconciliation you are able to clear 4 types of transactions:
- Deposits - a group of cash receipts
- Cash Receipt - a single cash receipt
- Cash Disbursement
- Journal Entry Lines
Creating a Bank/Credit Card Reconciliation
Step by step:
- Navigate to the Bank Reconciliation Tab (This is also used for a credit card reconciliation)
- Click New button
- Enter the following 4 fields of information from your statement:
- Start Date
- End Date
- Beginning Balance
- Ending Balance
- IMPORTANT NOTE: If this is a bank reconciliation, beginning and ending balances should be positive, unless the account is overdrawn. If this is a credit card reconciliation, these should be negative numbers since the credit card is a liability. If the credit card account started with a balance and was completely paid off, then the beginning balance would be negative and the ending balance would be $0.
Notes about reconciling a bank account:
- Typically there are no uncleared deposits or cash receipts
- Uncleared cash disbursements typically show checks to vendors that were issued, but not cashed yet.
- The transactions exception report typically should have no entries. This is a list of all transactions booked to the cash account from a source other than the cash receipts, cash disbursements and journal entry lines.