Bank Reconciliation Statement Concept, Procedure and Benefits
Humans have been earning since the age of civilization, be it was trade and commerce. But the moment he learned to make he leaned top save. Save for the future, as the no one knows how the future might treat. This can be considered as one of the primary steps of human exhibiting his intelligence. Humans made bank that were to made to save money or his savings, because not always it is possible to protect it from home, because many a thing such as theft, heist or just fraud could be the case, in order to save from that crisis banks are made where money will be saved through a legitimate, risk -free way.
Utilities of Bank:
The bank is an institution where an individual saves his earning licensed to receive deposits and provide loans. Bank can also a few financial services such as currency exchange and business wealth management. However, there are two types of bank, Commercial bank, and Retail Bank; there are many banks which are controlled by a central bank or national government.
Bank Accounts are Convenient:
Bank accounts are most suitable when it comes to transaction of money. Which means if you have a bank account, you can draw a check to pay or receive a check as payment. Also, there is an Automated Teller Machine (ATM) from where you can bring money when even where you want.
Banks are Safe:
Banks are the safest institution to save your money. As banks are insured even after theft or fire, you can be sure of getting most of the money back. However, the maximum account of Monet that can be guaranteed is $100000. The bank is also an n easy way to save money; many banks offer various rates of interest which will help you over time to grow you deposit as it matures.
Though Bank Account you can Access Credit:
When it comes to more significant investment such as buying a house or car, which is probably a lifetime investment in most of the cases. It can be difficult to arrange that amount of money all at once. Bank can be the one to help in that way, at once Banks can provide loans. There are many kinds of investments such as education loan to pursue higher education, a house loan for a house of your dream, even a car loan when you need to get a car of your own.
The procedures through which a bank guides the customers are building societies that offer the individual attention and service to their customers. These special presentations are regularly done to get the banking process to run smoothly. Like, make a balance sheet, checking the debits and credits and the expenses of the miscellaneous items all are to be encountered to check them over the balance sheet. Balance sheet if may or may not balance, but have everything met on it is a necessity. One of such intuitive procedure is Bank Reconciliation statement, which is a document that must be produced to maintain the overall expenses of the bank.
Concept of Bank Reconciliation Statement:
Bank reconciliation statement is a document, which is made to the basis of the cash balance of a company’s balance sheet. It is made to find out any fraud or any manipulation. While preparing the cash balance. It is imperative to prepare the bank reconciliation as it is essential to record the cash deposit transit, outstanding balances, and service fees.
The Procedure of Bank Reconciliation:
Bank reconciliation statement is made to compare the issued checks of the company, to identify the uncleared deposits in transit. Then by using cash balance, it is preferably added to the deposit transit. It is also to deduct the outstanding checks if any. Then by using the company’s ending cash balance interest is added if at all earned any. Once everything is done, the reconciliation must match with the company’s ending and cash balance.
Benefits of Bank Reconciliation Statement:
Bank reconciliation statement is helping a company to find accounting errors. Which may include addition and subtraction of mistakes and any double payment if any. Also, there are at times when banks may make some errors, in favor of you, Bank reconciliation helps to resolve these errors. It also helps to track fee and interest.
Detection of Fraud:
Bank reconciliation helps one to find fraud and spot fraudulent transactions. It also helps to detect if any individual tries to falsify the account with something.
As you know that bank is reliable to you, and whenever any mistakes happen, bank reconciliation statement helps to detect the accuracy of it. It can be just a simple entry error just as only a mishap of absolute numbers, bank reconciliation helps nitpick the most minute mistakes if there is any. It will help you get the most accuracy, as errors may happen such as double payments and addition and substation, or even missed payments. There are other mistakes as well, such as an invoice wrongly recorded, on the ledger, these mistakes can be detected easily once a bank reconciliation has been done.
Helps to Achieve Accurate Balance:
A bank reconciliation reveals the exact cash transaction, with the bank and with which are still outstanding. Although a check is the most common form of trade which remains open at the end of the period, they may not be clear as of the ending date of the statement. However, a bank reconciliation helps to detect any such mistakes which are primarily not recognized by the bank.
A lot of things together makes a bank. A bank is not only just a place to gather or invest money but also transaction area where you trust your money to let it circulate. Bank, on the other hand, guarantees trust and discipline. However, at times, mistakes can happen at any point in time, the modern accounting system helps to detect everything; every hidden error. Bank reconciliation statement is one of it which helps to resolve a lot of accounting issues.
Sudha is the senior publisher at Finance Glad. Sudha completed her education in BBA (Bachelor of Business Administration). She lives in Chennai. She is currently heading towards the banking topics. Sudha is an expert in analyzing and writing about most of the banks and credit card reviews. Sudha main hobbies and interests are reading, writing and watching the quality stuff over the internet. She usually wants to learn more productive stuff and share the best information to her readers over the internet via Finance Glad.