In this lesson, Nick Palazzolo, CPA, demystifies the bank reconciliation process by breaking down its key components to ensure accuracy between the bank balance and the book balance as recorded by a company. He starts by clarifying the purpose of a bank reconciliation, which is to find out what each balance should be aware of. Nick explains common items like deposits in transit, outstanding checks, and any bank or company errors, illustrating how each affects the overall balance. He emphasizes the importance of knowledge—what the bank knows versus what the books know—and he provides practical tips on adjusting book entries for bank interest, electronic deposits, bank fees, check printing costs, auto payments, and returned checks to achieve a reconciled statement, a critical skill that will be encountered in a cash rec simulation.
Lesson: Bank Reconciliation
In this lesson, Nick Palazzolo, CPA, demystifies the bank reconciliation process by breaking down its key components to ensure accuracy between the bank balance and the book balance as recorded by a company. He starts by clarifying the purpose of a bank reconciliation, which is to find out what each balance should be aware of. Nick explains common items like deposits in transit, outstanding checks, and any bank or company errors, illustrating how each affects the overall balance. He emphasizes the importance of knowledge—what the bank knows versus what the books know—and he provides practical tips on adjusting book entries for bank interest, electronic deposits, bank fees, check printing costs, auto payments, and returned checks to achieve a reconciled statement, a critical skill that will be encountered in a cash rec simulation.
Updated: Oct. 20, 2021 Create an account