Balancing your bank account

When you enter records of money paid into and out of your bank account into the cash book, there is a delay of at least a couple of days until these transactions are cleared through the banking system and appear on your bank statement. Therefore, the bank balance according to the cash book will normally be different from that on your bank statement at any given date.

To ensure that the difference between the two balances is due merely to the time difference in entering items, you should draw up a bank reconciliation statement:

If after your reconciliation there is still a difference between the two balances, check the cash book and bank statements in detail to find the discrepancy.

Common mistakes are:

• Cheques either not recorded in the cash book or entered twice
• Standing orders or direct debits not recorded
• Bankings or giro credits not recorded
• Mis-additions in the cash book
• Cheques still outstanding from the previous month

You should amend the cash book to agree with your bank reconciliation.

Do call us if you would like further help or advice in this area.