It is good practice to reconcile to ending statement balances as often as possible for bank, credit card, line of credit, petty cash, and even some asset and liability accounts.  Comparing to these third-party “reality” statements is one of the best ways to verify that the numbers in your QuickBooks file are a true reflection of what is happening in your business finances.

Every business decision you make will be based (to some extent) on the financial status that you are seeing in your QuickBooks reports, and your assurance of the reliability of those reports as a true picture of your company’s financial standing.  Management and audit decisions will also rely on the accuracy of these figures.

Clearing a transaction happens when you simply make note of it having simply processed through your bank or credit card account.  In QuickBooks, this clearing action is noted by an asterisk. 

Reconciling, however, takes place when you not only clear transactions, but for a unique block of time, say for the month of August, you are actually reconciling to a balance as of a certain (closing) date.  In QuickBooks, reconciliation is noted by a checkmark next to the corresponding transactions in your register.

Your institution’s financial statement will have definite starting and stopping balances, which will provide a snapshot of your financial activity for that period of time.  Your financial record for that period should match exactly with the statement.  If it doesn’t, you must research and find the reason why.  The difference can be $.20 (twenty cents) or $2,000.00 (two thousand dollars), but ANY discrepancy must be found and rectified if your records are to be dependable as a true record of your business finances.  There are never expenses or sales titled as Miscellaneous or Discrepancy, and so neither can any differences in your account be labeled that way.  You MUST search out and rectify ALL discrepancies.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.

Share This Post: