RECONCILING

The biggest job I have as a bookkeeper, is reconciling, and I thought you might like to know more about that.

 

What do I mean by Reconciling?

 

Reconciling is defined as: the process of ensuring that one’s records of transactions on a bank account matches the bank statement. That is, each time one writes a check, uses a debit card, or otherwise makes a withdrawal from or deposit into a bank account, one keeps a record of the transaction. Account reconciliation involves making sure that these records match the bank’s of the same transactions.

From: Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

 

There are a lot more reconciliations in bookkeeping than those of the bank account as mentioned above:

  • The lists of outstanding customer invoices need to total up to the same amount as is showing on your Balance Sheet.
  • The lists of outstanding supplier bills need to total up to the same amount as is showing on your Balance Sheet.
  • The VAT account after your VAT return should be Zero if you’re using Standard Accounting. If you’re using Cash Accounting, then the VAT account should reflect the VAT content of your outstanding Debtors and Creditors – this is usually checked at your Financial Year End.
  • Also at Financial Year End, the Fixed Assets accounts are reconciled and checked.
  • Reconciling the credit card accounts, the same as for the bank accounts.
  • Reconciling any (Petty) cash accounts.
  • Reconciling any applicable Payroll Taxes accounts – which is reconciling the payroll taxes due against actual payments made. This is then also reconciled against your HMRC account.
  • Reconciling any Net Wages accounts – which is reconciling the payroll wages against the actual payments made.
  • Reconciling any possible Loan Accounts against the loan company’s statements, making possible adjustments for interest charged.
  • Reconciling Creditors accounts against the Supplier’s Statements.

 

There may be other reconciliations depending on your particular business model.

 

The first thing you do as a bookkeeper, is sorting out the paperwork. Then entering all this paperwork by type: invoices, bills, wages, cash receipts, credit card receipts etc into whatever record you chose, whether this is an accounting software, spreadsheet or a manual accounting ledger book. Once these are entered, then the reconciling begins. The reconciling usually highlights problem areas, which are then queried, and resolved and this can be quite time consuming.

 

But lots of fun 🙂

 

As always, keep it simple and… Flourish and Prosper 🙂

Lisa

 

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