Bank Reconciliation

Bank reconciliation has something to do with book balance and bank statement balance. The two balances might have discrepancy, so this process is being done.

Deposit in transit and bank error (understatement of account) are added on bank statement balance. Outstanding checks and bank error (overstatement of account) are deducted from bank statement balance. While on the book balance, collection by the bank (including interest), book error (understatement of account) and credit memo will be added on the book balance. No Sufficient Fund (NSF), bank service charge, book error (overstatement of account) and debit memo are deducted from the book balance. There is also a three-line header in bank reconciliation. (Click here for more information)