A Step-By-Step Guide: THE PROBLEM: Why Is My Cash Account Not Reconciling With My Statement?THE SOLUTION: There are many reasons why you are not able to tie out your bank statements, below are 5 of the most common reasons why and how-to go about solving the problem.WHY THIS IS IMPORTANT? Although it may seem like a daunting task, reconciling your accounts is a critical accounting task that you should carry out every month. Doing so helps ensure the integrity of your financial reports, since most of your accounting transactions ultimately affect cash in some fashion. 1) The transaction date was posted in the future Most reconciliation windows will ONLY show the transactions through the ending date of your bank statement. In order to see if the unreconciled item was posted in the future, change the date to include future transactions. I would go a year in the future just in case. If you do find the transaction, you should be able to change the date and reconcile the item by double clicking on the transaction and changing the date. This will work in QuickBooks. However, if you are using SAP or Sage, the process is a little different because you are not able to change anything in this software once it has been posted. So you will need to go in and void the transaction and re-create it. 2) The transaction amount was entered incorrectly When going through each line item when reconciling, look to see which items have not been cleared and sort your report by uncleared transactions and go through each one to see if the date and descriptions match your statement but the amounts are wrong. QuickBooks will allow you to change the amount and save it. However, if you are using Sage or SAP, you will need to void the transaction and recreate it. You can create a debit/credit note in order to increase or decrease the amount depending on the discrepancy and posting it to the original transaction. Once this is completed, then you can go in and post the transaction. 3) The transaction was posted to the wrong account. Most accounting software has a "find" button or a short cut to use to get there. For instance: QuickBooks online has a search button, QuickBooks Desktop has a "ctrl+f" button, and Xero has a magnifying glass icon you can search (Not Fixed Assets/Payroll). Enter the amount of the transaction from your statement that needs to be reconciled Locate the transaction in the list that is provided. Look to see what account the payment, journal entry or deposit was posted to and change to the correct account. If you work in a program that does not allow you to do this, such as Sage or SAP then: If you are working in thecurrent period, you can void the payment and re-issue to the correct account OR If the account you need to change was from aclosed period, you can create a journal entry to re-class from the wrong account to the correct account. 4) The Transaction Has Not Been Posted Yet:♦ For Payables that were not paid via check through your accounting system: If you run the aging payables report and the bill is still on the report, the payment was not processed through the system yet. Go to your pay bills window and process the payment with the same date and transaction number from your statement. If you run the aging payables report and the bill is not on the report and you can not see it in your vendor profile then it has not been posted yet. Locate the source document (i.e. the bill/invoice) Go into your enter bills/enter invoices screen and go through the process of entering in the bill, paying the bill and posting the payment in your accounting system. Important note:Make sure that the account code you enter into the bill is correct. This will eliminate any reclassifications that will need to be completed when you do your month-end close.Also when you pay your bills, make sure the bank account is the one you are paying the bills out of. ♦ For Receivables that were not recorded into the bank account or that the payment was not received yet: If you run the aging receivables report and the invoice is still on the report, the deposit was not recorded through the system yet. Go to your "Receive Payments" window and create and apply the payment to the customer. This amount will be posted into your undeposited funds account and will stay there until you record the deposit. Go to your "Record Deposits" window to deposit the funds into your bank account. If you run the aging receivables report and the invoice is not on the report or you don't see that it has been invoiced/billed in the customer profile then: Go into your create invoices window and create the invoice from a "Purchase Order" or "Sales Order" or "Estimate" or "From Scratch" Go into the "Receive Payments" window and receive the amount that was deposited. This amount will be posted into your undeposited funds account and will stay there until you record the deposit. Go to your "Record Deposits" window and deposit the amount. Important note: If you made multiple customer deposits in one deposit, your bank is going to record the FULL amount of the deposit. So when you do your deposits in your accounting system, you want the deposit to be the same amount as your back shows. This will make reconciling your bank account much easier when you get to that step because your cash account and your bank statement will have the same amounts deposited. 5) You did not reconcile the account with the correct transactions on your previous reconciliation(s) Many people just reconcile their accounts without making sure that what they are reconciling are matching with the bank statement. Just because the amount is the same, does not necessarily mean that it is the same. Always make sure that what you are reconciling is accurate. Also, I would recommend that when you reconcile an account and it does not tie to $0 to NEVER put the amount in the unreconciled differences account. The reason why it is off is because they DO NOT TIE WITH YOUR STATEMENTand research is further needed. QuickBooks has an extremely helpful tool that will allow you to see any reconciliation discrepancies. Ideally, this discrepancy report should never have any transactions listed. If it does, this is a great place to start. Locate the discrepancies and proceed to research why they are on your report. Did you accidently delete/void a previously reconciled item ?Or deleted/voided it because it was entered incorrectly? Not sure why it was deleted/voided? You will need to "Undo the Last Reconciliation" to fix this problem If the item was deleted you will need to recreate the item in order to reconcile your statement Thank you for reading my post.
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