Bank Reconciliations

Making financial decisions with accurate information is imperative and understanding your cash balance is fundamental to the decision-making process.  Cash is usually the first item on the balance sheet of the financial statements and can be an indicator of the short-term viability of a corporation.  However, the accounting cash balance does not always reflect what is on a bank statement.  The difference is determined by a reconciliation of the bank and done for each bank account.

Two of the most common adjustments made to the bank include outstanding checks and deposits in transit.

Outstanding checks

Outstanding checks include payments that have been made, most often by a check written as of the financial statement date, however had yet to clear the bank.  These amounts must be subtracted from the bank balance in the reconciliation.

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Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning services.