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Bank Reconciliation definitions

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  • Bank Reconciliation
    Process of comparing a company's records with the bank statement to identify and adjust for timing differences and errors.
  • Deposits in Transit
    Cash receipts recorded by the company but not yet processed or cleared by the bank at the statement date.
  • Outstanding Checks
    Checks issued and recorded by the company but not yet cleared or deducted by the bank.
  • Bank Errors
    Mistakes made by the bank in recording transactions, requiring correction to reflect the accurate account balance.
  • Book Errors
    Mistakes in the company's accounting records that must be identified and corrected during reconciliation.
  • Bank Collections
    Funds collected by the bank on behalf of the company, often without prior notice, increasing the book balance.
  • Electronic Funds Transfer
    Automatic movement of money into or out of the company's account, such as direct deposits or payments.
  • Service Charges
    Fees imposed by the bank for account maintenance or transactions, reducing the company's book balance.
  • Interest Revenue
    Earnings credited by the bank to the company's account for holding funds, increasing the book balance.
  • NSF Checks
    Customer checks deposited by the company that are returned unpaid due to insufficient funds in the payer's account.
  • Adjusted Balance
    Final reconciled cash amount that matches both the bank statement and company records after all adjustments.
  • Internal Control
    Procedures and policies, such as reconciliations, designed to safeguard assets and ensure accurate financial records.
  • Time Lag
    Delay between recording transactions in company books and their appearance on the bank statement.
  • Cash
    Most liquid asset, easily accessible and susceptible to theft, requiring strong controls like reconciliations.