Bank reconciliation is the important accounting process that every company or business or organization needs to do. In general the departmental closing balance must agree with the bank closing balances. It means the closing balance thus shown in the bank statement may not agree with the departmental closing balance in most of the cases.
The reason as in the case of payment is that all the cheques issued to the customers and others of the business or company or organization are necessarily to be paid or presented for payment during the month itself. The person to whom the cheque issued need not be insisted for presenting the cheque for payment into his/her bank account immediately. The cheque may be presented immediately for payment or may not be presented for payment during the month it self. In such instances the departmental closing balance and bank balance will differ.
Like this all the cheques, drafts that are remitted into the bank account of the company or company or organization need not be credited into the bank account immediately. There may be delay in crediting the amount or omission in crediting the amount.
Under such circumstances also the departmental closing balance and bank balance will differ. In these situations the bank reconciliation process is initiated and a bank control account will be prepared after finding out the reasons for the difference between the departmental closing balance and bank closing balance.
The reason as in the case of payment is that all the cheques issued to the customers and others of the business or company or organization are necessarily to be paid or presented for payment during the month itself. The person to whom the cheque issued need not be insisted for presenting the cheque for payment into his/her bank account immediately. The cheque may be presented immediately for payment or may not be presented for payment during the month it self. In such instances the departmental closing balance and bank balance will differ.
Like this all the cheques, drafts that are remitted into the bank account of the company or company or organization need not be credited into the bank account immediately. There may be delay in crediting the amount or omission in crediting the amount.
Under such circumstances also the departmental closing balance and bank balance will differ. In these situations the bank reconciliation process is initiated and a bank control account will be prepared after finding out the reasons for the difference between the departmental closing balance and bank closing balance.
