One of the most common cash control procedures is the bank reconciliation. The reconciliation is needed to identify errors, irregularities, and adjustments bank reconciliation journal entries pdf the Cash account.
In business, every bank statement should be promptly reconciled by a person not otherwise involved in the cash receipts and disbursements functions. Having an independent person prepare the reconciliation helps establish separation of duties and deters fraud by requiring collusion for unauthorized actions. There are many different formats for the reconciliation process, but they all accomplish the same objective. Differences are caused by items reflected on company records but not yet recorded by the bank. Other differences relate to items noted on the bank statement but not recorded by the company. The following format is typical of one used in the reconciliation process. Once the correct adjusted cash balance is satisfactorily calculated, journal entries must be prepared for all items identified in the reconciliation of the ending balance per company records to the correct cash balance.