What is Bank Reconciliation and Credit Card Account Reconciliation - PowerPoint PPT Presentation

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What is Bank Reconciliation and Credit Card Account Reconciliation

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Bank Reconciliation is a document that matches the cash balance on a company’s balance sheet to that of bank statements. Reconciling the two accounts helps determining if accounting changes are needed. It is carried out at regular intervals to ensure the company's cash records are accurate. If there is any fraud or theft it can be determined through reconciliation. – PowerPoint PPT presentation

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Title: What is Bank Reconciliation and Credit Card Account Reconciliation


1
What is Bank Reconciliation and Credit Card
Reconciliation?
  • LedgerBench

2
  • In any business, cash is the lifeblood. Cash
    helps in performing day to day business
    activities. The payment of employees also depends
    upon the availability of cash. Marketing of goods
    and services also requires cash. So, bank and
    credit card account reconciliation plays an
    important role to ensure there is availability of
    cash. Just as you need to reconcile your personal
    checkbook, the same way your bank account and
    credit card accounts need to be reconciled to
    ensure your balances are accurate. 

3
What is Bank Reconciliation?
  • Bank Reconciliation is a document that matches
    the cash balance on a companys balance sheet to
    that of bank statements. Reconciling the two
    accounts helps determining if accounting changes
    are needed. It is carried out at regular
    intervals to ensure the company's cash records
    are accurate. If there is any fraud or theft it
    can be determined through reconciliation. 

4
What is Credit Card Reconciliation?
  • Credit Card Reconciliation verifies the integrity
    of data between credit card statements to that of
    companies internal financial records. It begins a
    comparison between credit card statements and the
    transactions with various accounts in a companys
    accounts. It ensures if the balances are
    accurate. Otherwise the accountants take
    necessary actions for discrepancies. 
  • The bank and credit card account reconciliation
    is a process to verify that all transactions in
    your bank or credit card account are recorded in
    the general ledger as cash receipts, cash
    Disbursements and general entry adjustments. For
    this you require your monthly end of statement.
    Reconciling monthly statements and reviewing
    general ledger accounts at regular intervals of
    time will help in making right decisions for the
    growth of the business and would also help in
    reducing overhead expenses. 

5
The importance of reconciliation bank and credit
card account
  • It helps in creating a correct general ledger.
  • The late fees and interest charged can be managed
    and minimized
  • It helps in recording true liabilities of the
    business
  • The missing receipts or online purchases can be
    recorded
  • It also helps in recognizing fake charges,
    illegal purchases and wrong postings in account. 
  • It helps in fixing unrecorded entries and
    accuracy of the books can be maintained. 
  • It helps in analyzing lost checks, deposits and
    unauthorized transactions
  • Put an end to unjustified bank charges and ensure
    transactions are posted correctly in the bank. 
  • Prevent frauds of funds within the company

6
Procedure of Bank Reconciliation statement
  • On the bank statement, compare the companys list
    of issued checks and deposits to the checks shown
    on the statement to identify uncleared checks and
    deposits in transit.
  • Using the cash balance shown on the bank
    statement, add back any deposits in transit.
  • Deduct any outstanding checks.
  • This will provide the adjusted cash balance of
    the bank.
  • Next, use the companys ending cash balance, add
    any interest earned and notes receivable amount.
  • Deduct any bank service fees, penalties, and NSF
    checks. This will arrive at the adjusted company
    cash balance.
  • After reconciliation, the adjusted bank balance
    should match with the companys ending adjusted
    cash balance.

7
Process of Credit Card Reconciliation
  • The process begins when a credit card statement
    is received or after the closure of a financial
    period. 
  • Accountants go through the transaction on credit
    card statements and match it to transactions in
    companys internal records.
  • This process includes both outbound ( suppliers,
    service card providers) and inbound (customers)
    credit card payments. 
  • In case of any discrepancies, necessary action
    will be taken. It includes disputing transactions
    with the credit card processor, making journal
    entries to correct timing items or errors, or
    other actions to address transaction issues. 
  • All the information and action taken are stored
    for audit purposes. 

Source URL - https//ledgerbench.blogspot.com/2020
/04/what-is-bank-reconciliation.html
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