What is Bank Reconciliation and Credit Card Account Reconciliation

1
What is Bank Reconciliation and Credit Card
Reconciliation?

• LedgerBench

2

• In any business, cash is the lifeblood. Cash
  helps in performing day to day business
  activities. The payment of employees also depends
  upon the availability of cash. Marketing of goods
  and services also requires cash. So, bank and
  credit card account reconciliation plays an
  important role to ensure there is availability of
  cash. Just as you need to reconcile your personal
  checkbook, the same way your bank account and
  credit card accounts need to be reconciled to
  ensure your balances are accurate. 

3
What is Bank Reconciliation?

• Bank Reconciliation is a document that matches
  the cash balance on a companys balance sheet to
  that of bank statements. Reconciling the two
  accounts helps determining if accounting changes
  are needed. It is carried out at regular
  intervals to ensure the company's cash records
  are accurate. If there is any fraud or theft it
  can be determined through reconciliation. 

4
What is Credit Card Reconciliation?

• Credit Card Reconciliation verifies the integrity
  of data between credit card statements to that of
  companies internal financial records. It begins a
  comparison between credit card statements and the
  transactions with various accounts in a companys
  accounts. It ensures if the balances are
  accurate. Otherwise the accountants take
  necessary actions for discrepancies. 
• The bank and credit card account reconciliation
  is a process to verify that all transactions in
  your bank or credit card account are recorded in
  the general ledger as cash receipts, cash
  Disbursements and general entry adjustments. For
  this you require your monthly end of statement.
  Reconciling monthly statements and reviewing
  general ledger accounts at regular intervals of
  time will help in making right decisions for the
  growth of the business and would also help in
  reducing overhead expenses. 

5
The importance of reconciliation bank and credit
card account

• It helps in creating a correct general ledger.
• The late fees and interest charged can be managed
  and minimized
• It helps in recording true liabilities of the
  business
• The missing receipts or online purchases can be
  recorded
• It also helps in recognizing fake charges,
  illegal purchases and wrong postings in account. 
• It helps in fixing unrecorded entries and
  accuracy of the books can be maintained. 
• It helps in analyzing lost checks, deposits and
  unauthorized transactions
• Put an end to unjustified bank charges and ensure
  transactions are posted correctly in the bank. 
• Prevent frauds of funds within the company

6
Procedure of Bank Reconciliation statement

• On the bank statement, compare the companys list
  of issued checks and deposits to the checks shown
  on the statement to identify uncleared checks and
  deposits in transit.
• Using the cash balance shown on the bank
  statement, add back any deposits in transit.
• Deduct any outstanding checks.
• This will provide the adjusted cash balance of
  the bank.
• Next, use the companys ending cash balance, add
  any interest earned and notes receivable amount.
• Deduct any bank service fees, penalties, and NSF
  checks. This will arrive at the adjusted company
  cash balance.
• After reconciliation, the adjusted bank balance
  should match with the companys ending adjusted
  cash balance.

7
Process of Credit Card Reconciliation

• The process begins when a credit card statement
  is received or after the closure of a financial
  period. 
• Accountants go through the transaction on credit
  card statements and match it to transactions in
  companys internal records.
• This process includes both outbound ( suppliers,
  service card providers) and inbound (customers)
  credit card payments. 
• In case of any discrepancies, necessary action
  will be taken. It includes disputing transactions
  with the credit card processor, making journal
  entries to correct timing items or errors, or
  other actions to address transaction issues. 
• All the information and action taken are stored
  for audit purposes. 

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