Bank to Book Reconciliation

One method of reconciling a checkbook or accounting records is called bank to book reconciliation. It begins with the bank’s balance according to the most recent statement, compares it to a company's or individual's records and adjusts it accordingly in terms of deposits, checks or other withdrawals.

Purpose

The purpose of a bank reconciliation is to balance out a checkbook. This is done to verify that the checkbook amount is equal to that on the bank statement and to discover any discrepancies that exist.

Process

The bank to book reconciliation method starts with the ending balance stated on the most current bank statement. To this amount, uncleared check amounts are subtracted and uncleared deposits are added. Any other adjustments not listed in both places are added or subtracted accordingly so the bank's balance and your checkbook's balance (or the balance on a company's accounting ledger) match.

Terminology

When reconciling a checkbook, it’s important to understand the terms "debits" and "credits." For banks, "debits" and "credits" mean the opposite of what they mean for a personal or business checkbook. This is because to a bank, a depositor’s money is a liability. When liabilities increase, a credit occurs. When they decrease, a debit occurs. In accounting, a debit to cash increases cash, while a credit to cash decreases it.

References

About the Author

Jennifer VanBaren started her professional online writing career in 2010. She taught college-level accounting, math and business classes for five years. Her writing highlights include publishing articles about music, business, gardening and home organization. She holds a Bachelor of Science in accounting and finance from St. Joseph's College in Rensselaer, Ind.