Bank reconciliation

Written by Fmi.Online Friday January 6, 2023
A bank reconciliation or bank reconciliation is a report used to check and explain the differences between the cash balance in a company’s accounting ledger and the bank statement balance. A bank reconciliation is also one of the main ways to prevent fraud and embezzlement of company funds. Here is how it works.

Explanation:

A bank reconciliation checks the accuracy of both records: the bank statement and the accounting records. Basically, a bank reconciliation has two columns: one for all the bank statement transactions and one for all the accounting record transactions. Each transaction is matched and checked off to see what checks are outstanding and what deposits are in transit. Once the bank statement balance is adjusted for deposits in transit and outstanding checks and the book balance is adjusted for bank account activity not recorded in the accounting system, the two adjusted balances should be equal. Here is what an example bank reconciliation looks like.

In a nutshell :

  •  A bank reconciliation statement summarizes banking and business activity, reconciling an entity's bank account with its financial records
  • . Bank reconciliation statements confirm that payments have been processed and cash collections have been deposited into a bank account.
top-arrow
Our Courses are designed to boost your career

Launch your career with Fmi’s Learning Pathway

Choose a learning pathway that best meets your needs and ambitions. Not sure which Fmi learning pathway is right for you? Explore our CareerBuddy videos for help and advice.

Investment banking pathway
  • courses-clock60+ hours
  • courses-desktop9 courses

Investment banking offers many exciting career opportunities for students. From Financial Analysts to Investment Management, and Sales & Trading to a wide range of roles in infrastructure such as IT, Risk or Compliance. This pathway is designed to help you understand the investment banking industry, the roles investment banks are recruiting for, and most importantly, help you to develop the practical skills you need to get into the industry and your preferred role whether this be as part of a school leaver, intern or graduate program.

FMI Online Student join-student-img2 FMI Online Student
55,000+ students currently enrolled
Global markets pathway
  • courses-clock70+ hours
  • courses-desktop10 courses

Global markets provide a range of important products and services to corporates, institutions and governments worldwide from executing trades and managing risk to providing quality research content. A key business area in all investment banks, global markets offers a wide range of career paths for students to consider across all functions and at all levels from school leavers to internships through to graduate programs.

FMI Online Student join-student-img2 FMI Online Student
85,000+ students currently enrolled
Asset management pathway
  • courses-clock50+ hours
  • courses-desktop8 courses

The asset management industry is a global industry worth over 100 trillion US dollars. It plays a crucial role in managing the assets of retail and institutional investors, offering a wide range of exciting careers in doing so. If you’re looking to forge a career in asset management, our Asset management pathway is perfect for you. We help you build the skills all asset managers are looking for and explore everything you need to know about the industry and the wide range of roles available in the sector

FMI Online Student join-student-img2 FMI Online Student
100,000+ students currently enrolled