Reconciling Accounts in QuickBooks: Step-by-Step Guide

These fees are charged to your account directly, and reduce the reflected bank balance in your bank statement. These charges won’t be recorded by your business until your bank provides you with the bank statement at the end of every month. There are a few reasons your QuickBooks data may not match your account statements, including bank service charges, checks that haven’t cleared, and transactions that haven’t been entered in QuickBooks yet. Book transactions are transactions that have been recorded on your books but haven’t cleared the bank. As a small business, you may find yourself paying vendors and creditors by issuing check payments.

Step 1: Match Each Item on the Bank Statement to the Cash Account

After adjusting all the above items, you’ll end up with the adjusted balance as per the cash book, which must match the balance as per the passbook. In addition to this, the reconciliation process also helps keep track the occurrence of fraud, which can help you control your business’ cash receipts and payments. All of your bank and credit card transactions automatically sync to QuickBooks to help you seamlessly track your income & expenses.

Step 2: Selecting the Account to Reconcile

If you adjusted a reconciliation by mistake or need to start over, reach out to your accountant. You’ll need to adjust the closing balance of your bank statement in order to showcase the correct amount of withdrawals or any checks issued that have not yet been presented for payment. At times, your business may either omit bookkeeping certificate or record incorrect transactions for checks issued, checks deposited, or the wrong total, etc.

Note that this process is exclusively for reconciliations performed by hand. If you use accounting software, then your reconciliation is done largely for you. However, as a business owner, it’s important to understand the reconciliation process. You should perform monthly bank reconciliations so you can better manage your cash flow and understand your true cash position. Read on to learn about bank reconciliations, use cases, and common errors to look for.

Timing Differences in Recording of Transactions

This document will make auditors aware of the reconciled information at a later date. You need to determine the underlying reasons responsible for what is a debit and credit bookkeeping basics explained any mismatch between balance as per cash book and passbook before you record such changes in your books of accounts. Such information is not available to your business immediately, so you record no entry in the business’ cash book for the above items. You will know about this only when you receive the bank statement at the end of the month. As a result, your balance as per the passbook would be less than the balance as per the cash book. When your business receives checks from its customers, these amounts are recorded immediately on the debit side of the cash book so the balance as per the cash book increases.

With bank statement in-hand, you can systematically check off matching transactions one-by-one by clicking their boxes. The bottom of the screen contains a running total of items you have checked off, and thus how to calculate fees earned in accounting have been reconciled. This is useful for comparing the totals in your books to the totals on your bank statement. Make sure that you’ve also taken into account all deposits and withdrawals to an account when preparing the bank reconciliation statement. Once you complete the bank reconciliation statement at the end of the month, you need to print the bank reconciliation report and keep it in your monthly journal entries as a separate document.

Data entry error

1. The bottom of the screen contains a running total of items you have checked off, and thus have been reconciled.
2. Cut checks or pay employees via direct deposit, issue W2s at tax time, and file taxes electronically – all from QuickBooks.
3. The balance recorded in the passbook or the bank statement must match the balance reflected in the customer’s cash book.

However, businesses with high transaction volumes might benefit from more frequent reconciliations. Below, we delve into a detailed explanation of the account reconciliation process within QuickBooks. Since all of your transaction info comes directly from your bank, reconciling should be a breeze. This lets you write a check or enter a bill to pay to cover the outstanding balance.

By diligently following the steps outlined in this guide, you’re not just reconciling accounts — you’re reconciling your financial aspirations with your financial reality. In doing so, you pave the way for a thriving and sustainable future for your business. Balancing accounts might sound like a tedious task, but its significance cannot be overstated.

The bank will debit your business account only when they’ve paid these issued checks, meaning there is a time delay between the issuing of checks and their presentation to the bank. These time delays are responsible for the differences that arise in your cash book balance and your passbook balance. Nowadays, all deposits and withdrawals undertaken by a customer are recorded by both the bank and the customer. The bank records all transactions in a bank statement, also known as passbook, while the customer records all their bank transactions in a cash book. In order to prepare a bank reconciliation statement, you’ll need to obtain both the current and the previous month’s bank statements as well as the cash book.