Tracking Down Bank Account Errors for Your Business - dummies

Tracking Down Bank Account Errors for Your Business

Periodically, you need to reconcile your business’s bank accounts against statements provided by the bank. Ideally, your balance and the bank’s balance adjusted by transactions not yet shown on the statement should match. If they don’t, you need to find out why:

  • If the bank balance is higher than your balance, check to be sure that all the deposits listed by the bank appear in the Cash account in your books. If you find that the bank lists a deposit that you don’t have, you need to do some detective work to figure out what that deposit was for and add the detail to your accounting records.

    Also, check to be sure that all checks have cleared. Your balance may be missing a check that should have been listed in outstanding checks.

  • If the bank balance is lower than your balance, check to be sure that all checks listed by the bank are recorded in your Cash account. You may have missed one or two checks that were written but not properly recorded.

    You also may have missed a deposit that you have listed in your Cash account and you thought the bank already should have shown as a deposit, but it was not yet on the statement. If you notice a missing deposit on the bank statement, be sure you have your proof of deposit and check with the bank to be sure the cash is in the account.

  • If all deposits and checks are correct but you still see a difference, your only option is to check your math and make sure all checks and deposits were entered correctly.

If a bank account error is just a matter of pennies, you probably don’t need to waste your time trying to find the error, and you can just adjust the balance in your books. But if the difference is a significant amount for your business, you should try to track it down. You never know exactly what accounts are impacted by an error or how that difference may impact your profit or loss.