Credit: The Great Harrison Metal (This has been uploaded to help people for free) Reconciliation is an accounting process that compares two sets of records to check that figures are correct and in agreement. Reconciliation also confirms that accounts in the general ledger are consistent, accurate, and complete. The Reconciliation Process In most organizations, the reconciliation process is usually automated, using accounting software. However, since some transactions may not be captured in the system, human involvement is required to identify such unexplained differences. The basic steps involved when reconciling transactions include the following: 1. Compare internal cash register to the bank statement The first step is to compare transactions in the internal register and the bank account to see if the payment and deposit transactions match in both records. Identify any transactions in the bank statement that are not backed up by any evidence. 2. Identify payments recorded in the internal cash register and not in the bank statement (and vice-versa) It is possible to have certain transactions that have been recorded as paid in the internal cash register but that do not appear as paid in the bank statement. The transactions should be deducted from the bank statement balance. An example of such a transaction is a check that has been issued but has yet to be cleared by the bank. A company may issue a check and record the transaction as a cash deduction in the cash register, but it may take some time before the check is presented to the bank. In such an instance, the transaction does not appear in the bank statement until the check has been presented and accepted by the bank. Conversely, identify any charges appearing in the bank statement but that have not been captured in the internal cash register. Some of the possible charges include ATM transaction charges, check-printing fees, overdrafts, bank interest, etc. The charges have already been recorded by the
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when an outcome is different than a plan or an expectation use a reconciliation to explain what happened i learned this from one of my bosses at disney and it made communication way better way easier inside the company there are three things you have to do to make the reconciliation first write down the number you had planned or expected it could be for sales profits units produced whatever second write down the number you actually got it might be lower or higher than you planned it's almost never exactly what you had expected third fill in the adjustments write the name of each of the sources of difference between the number you had planned and the number you actually got these are the reasons why the number changed next to each source of difference write the number difference or the variance attributable to that source it could be positive or negative just make sure you arrange the adjustments in descending order by size the biggest source of difference should be first do you get it i know you do now that you have these three steps under your belt anyone who can read and do addition can understand what's happening in the business let's ask this simpleton to take a look at your reconciliation see here simpleton we thought we'd have profits of a hundred dollars but then we spent more than we meant to on fancy water we got some unplanned severance to that employee who only worked from 10 a.m to 4 p.m and we got a surprise bill from amazon web services so we ended up only making ten dollars in profit the plan the adjustments and the actuals even the simpleton gets it and since you work at a company without simpletons your colleagues all of whom are above average intelligence well they can focus on what matters the management so what of all this you can make reconciliations for any quantitative output or process measurement that matters to your business you can reconcile plans versus actuals or last year's number to this year's number where the adjustments are the sources of growth or decline if you can measure it you can reconcile it in many companies people are wasting each other's time as they struggle to communicate relevant facts to each other it'd be so much better if you used a reconciliation you can establish the facts quickly and you can get on to the fun part of business the part where you sit around and you decide what the heck are we gonna do next your colleagues your board members your shareholders they are gonna thank you now go back to work
Original Description
Credit: The Great Harrison Metal (This has been uploaded to help people for free)
Reconciliation is an accounting process that compares two sets of records to check that figures are correct and in agreement. Reconciliation also confirms that accounts in the general ledger are consistent, accurate, and complete.
The Reconciliation Process
In most organizations, the reconciliation process is usually automated, using accounting software. However, since some transactions may not be captured in the system, human involvement is required to identify such unexplained differences. The basic steps involved when reconciling transactions include the following:
1. Compare internal cash register to the bank statement
The first step is to compare transactions in the internal register and the bank account to see if the payment and deposit transactions match in both records. Identify any transactions in the bank statement that are not backed up by any evidence.
2. Identify payments recorded in the internal cash register and not in the bank statement (and vice-versa)
It is possible to have certain transactions that have been recorded as paid in the internal cash register but that do not appear as paid in the bank statement. The transactions should be deducted from the bank statement balance. An example of such a transaction is a check that has been issued but has yet to be cleared by the bank.
A company may issue a check and record the transaction as a cash deduction in the cash register, but it may take some time before the check is presented to the bank. In such an instance, the transaction does not appear in the bank statement until the check has been presented and accepted by the bank.
Conversely, identify any charges appearing in the bank statement but that have not been captured in the internal cash register. Some of the possible charges include ATM transaction charges, check-printing fees, overdrafts, bank interest, etc. The charges have already been recorded by the
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