The process of comparing and matching a company's accounting records with its bank statement to identify and resolve any differences.
Bank reconciliation ensures that the cash balance in your books matches the bank's records. Differences arise from: outstanding cheques (issued but not yet cleared), deposits in transit, bank charges, direct debits, interest earned, and errors. Regular reconciliation prevents fraud, catches bank errors, and ensures accurate cash position. Under GST, reconciled bank records are essential for audit compliance.
Your books show ₹5,00,000 cash balance. Bank statement shows ₹4,75,000. Difference: ₹25,000 cheque issued to supplier but not yet cleared by bank. After reconciliation, both records match.
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Monthly at minimum, weekly for high-transaction businesses. Laabam.One's auto-bank reconciliation feature matches transactions in real-time as bank feeds are imported.
Outstanding cheques, deposits in transit, bank fees/charges, direct debits, interest credits, timing differences, and errors in either your books or the bank's records.
The net amount of cash and cash equivalents moving into and out of a business during a specific period.
The master accounting record that contains all financial transactions of a business, organized by account.
A periodic document issued by a bank summarizing all transactions (deposits, withdrawals, fees, interest) in an account over a specific period.
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