Bank Reconciliation FAQs

Applies to: [x] C&P Classic [x] C&P Pro [x] Job Tracker [x] C&P SQL [x] My C&P! See also:

Summary: Answers to frequently-asked questions reconciliating bank accounts with Clients & Profits. The bank reconciliation in Clients & Profits is similar to the worksheet on the back of your bank statement, it's just automated. Reconciliation is easy: all you need is your bank account number and bank statement's ending balance. Clients & Profits lists the bank account's uncleared items (i.e., checks, client payments, deposits, transfers, etc.) which are cleared by single mouse-click. The process is so fast, there's no reason not to reconcile your bank accounts every month. Where do I find the bank reconciliation in the Clients & Profits? Do I have to reconcile my bank accounts? We have several checking and savings accounts. Do I have to reconcile every account? We've never reconciled our bank accounts in Clients & Profits. What should I do? Once I reconcile the bank statement, should I print out the Bank Reconciliation Worksheet immediately? What's a batch number? Why would we use the "show deposits by batch number" option? How important is the "statement ending date"? I found an error I was reconciling an account. How do I fix the error without losing my reconciliation? Do I have to reconcile the bank accounts before starting work in the next accounting period? Do I have to reconcile the bank accounts at the same time each month? How are entries sorted in the bank reconciliation window? How is the difference between the reconciled balance and the G/L balance calculated? Can I print out a hard-copy of the bank reconciliation before I save it? Why is the "total JEs outstanding" list always empty? Can I change the statement balance, statement ending date, or other options from the Bank Reconciliation window? Do I have to balance in order to save the bank reconciliation? I'm having problems reconciling. What do I do now? Why are outstanding items missing from, or erroneously included in, the reconciliation window? How do I adjust for outstanding items not appearing on the list? Basic Concepts in Bank Reconciliation Q. Where do I find the bank reconciliation in the Clients & Profits? It's part of the checkbook: choose Accounting > Checkbook. Then choose Edit > Check Tools > Reconcile.   Q. Do I have to reconcile my bank accounts? Using Clients & Profits to prepare the monthly bank statement isn't a requirement, but a tool to make your job easier. By using Clients & Profits bank reconciliation feature, you can verify the actual amount of cash you have available, make sure all cash transactions are recorded, and see the bank didn't make an error on your account. It's as easy as clicking on a box for items showing up on the statement.   Q. We have several checking and savings accounts. Do I have to reconcile every account? Yes, you should reconcile every checking and savings account, even if it has only a few transactions. You want to make sure the bank didn't make a mistake. Clients & Profits has the ability to let you manage multiple checking and savings accounts and reconcile each account separately.   Q. We've never reconciled our bank accounts in Clients & Profits. What should I do? If you've never reconciled your bank statement using Clients & Profits, the first thing you'll need to do is a manual reconciliation of the bank account so you will know what the actual outstanding checks and deposits are. Then you need to go into Accounting > Checkbook then choose Edit > Check Tools > Reconcile and start the reconciliation for the bank account your working with. On the Bank Reconciliation window you need to select the option to clear all items, so it will mark all of the items as cleared. All the previously uncleared items will be checked. Then take the manual bank reconciliation you just completed, and for every outstanding check and deposit in transit, deselect the box for the corresponding item in Clients & Profits. Once you've done this correctly, your manual bank reconciliation should equal the reconciliation in Clients & Profits. If it doesn't, you'll need to make a journal entry to bring the Clients & Profits reconciliation into agreement with the manual reconciliation. From this point forward, you should use the Clients & Profits reconciliation instead of a manual reconciliation.   Q. Once I reconcile the bank statement, should I print out the Bank Reconciliation Worksheet immediately? Yes, print it out BEFORE you leave the Bank Reconciliation window. Once the difference is zero, if you save the window before printing the report, the report can not be printed later.   Q. What's a batch number? The batch number is a record field that groups together deposits to various clients into a single line item on the bank reconciliation. Typically, most users will use a batch number that contains the date of the deposit and some other identifying number, such as..."041599-1". This batch number identifies the date at 04/15/99, and this is deposit slip number one. You don't have to use a specific number format (the field is completely user defined), but when reconciling the statement, a batch number that has a specific meaning helps.   Q. Why would we use the "show deposits by batch number" option? You would use the same batch number for each line item of a single deposit slip, so when you go to reconcile the bank statement, your matching exact amounts. When using the batch number option, it's important you use the same exact number for each line item of the deposit slip, so they will group together.   Q. How important is the "statement ending date"? You use the statement ending date for selecting a cut-off date for outstanding items. This will allow you to reconcile your account to agree to the end of the month balance sheet, even if the reconciliation's occurring sometime later.   Q. I found an error I was reconciling an account. How do I fix the error without losing my reconciliation? A partial bank reconciliation can be temporarily saved by clicking the Save button. After you've fixed the error, opening the Bank Reconciliation window for the same bank account will restore your work.   Q. Do I have to reconcile the bank accounts before starting work in the next accounting period? No. While the bank reconciliation and the General Ledger work together, the accounting system isn't dependent on reconciled bank accounts.   Q. Do I have to reconcile the bank accounts at the same time each month? No. Your accounts can be reconciled at any time its convenient.   Q. How are entries sorted in the bank reconciliation window? Entries are sorted by reference number in three different sections: Deposits (PMT#) appear in the first section, checks (CK#) in the second section, and journal entries (JE#) in the third section. When looking for a certain date or reference number range, change the sort order by clicking on either date or description heading.   Another sorting option available to you, is the option to "show deposits by batch number." This option is in the first screen of the bank reconciliation. Choosing this option groups all the checks listed for a single deposit together and shows a single total amount. This makes reconciling to your bank statement much easier because it is how the bank lists deposits. If a deposit batch number wasn't used for a deposit, it appears as a single entry.   Q. How is the difference between the reconciled balance and the G/L balance calculated? In the bank reconciliation window, it's necessary to mark both debits and credits as outstanding items. The total of these outstanding items is then subtracted from the ending statement balance to produce the reconciled balance. Clients & Profits compares the reconciled balance with the G/L balance for that account and calculates the difference. To make this process faster, select the option to "clear all items" in the first screen of the bank reconciliation. This option will mark all entries in the second screen of the bank reconciliation as cleared items. You will then need to select only the outstanding items.   Q. Can I print out a hard-copy of the bank reconciliation before I save it? Yes. A "print" button in the window's toolbar prints a list of all outstanding items, all cleared items, or both. Each report also shows the calculation of the difference. This reports can be printed at any time during the reconciliation.   Q. Why is the "total JEs outstanding" list always empty? This list only shows journal entries entered directly into the General Ledger for such things are bank transfers, interest income, proceeds from loans or sales, service charges, and adjusting entries. If an account didn't have any of these kinds of entries during the month, this list will be empty.   Q. Do I have to balance in order to save the bank reconciliation? No. If your difference is not zero, you can save the bank reconciliation temporarily. Your selected items are not actually cleared, but remain marked as cleared items.   Q. Can I change the statement balance, statement ending date, or other options from the Bank Reconciliation window? No. Once you've made your selections and the start reconciling the account, you'll have to temporarily save your work, choose Edit > Checkbook Tools > Reconcile, then enter your new selections.   Q. I'm having problems reconciling. What do I do now? There is a quick check you can perform. To do this procedure, you must have a balanced printout (with a zero difference) of your last Clients & Profits bank reconciliation. From the first window, enter the bank statement ending balance from the last time you balanced, as shown on your printout. Do not select the option to "mark all items as cleared." When you click OK, the outstanding items will be subtracted from the last statement balance on the bank reconciliation window. The difference should still be zero and stay zero until you enter the new month's statement ending balance. Next, check all activity that updated the G/L cash account since the last time you reconciled. All of these items should appear on your outstanding list. Make sure you are checking only cash transactions added AFTER you last reconciled. The computer checkbook balance on your last balanced reconciliation PLUS these transactions should equal the computer checkbook balance on your reconciliation today. Print an audit trail of the bank account. Include all periods. Enter a date range from the day after your last balanced reconciliation (top right of printed reconciliation) to the date 12/31/2079 (to make sure it gets everything). Be sure to select date posted, not date added, from the pop-up menu. If the G/L was updated after the reconciliation was done that day, it may be necessary to print an audit trail for the day of the last balanced bank reconciliation.   Q. Why are outstanding items missing from, or erroneously included in, the reconciliation window? There can be several possibilities: - When the fiscal year is closed, outstanding items in the bank reconciliation are not carried forward to the new year's database. (With Clients & Profits Pro 3.0 having 24 accounting periods and Clients & Profits Classic 3.x, 4.x having 15 accounting periods, this would happen only in rare circumstances.) - If this is a recently-started database, the old outstanding information may not be entered. - If this database was converted from another version of Clients & Profits, the outstanding items from the old database will not be listed. - If importing payroll from another software program, verify that information was imported correctly. Check the payroll information against the Bank Reconciliation window for completeness and accuracy. Be certain that outstanding checks or charges are shown as outstanding. - Voided checks must be cleared. (Each voided check has two parts - the check and the void.) Since both the check and the void are invalid, make sure they don't appear as outstanding.   Q. How do I adjust for outstanding items not appearing on the list? Check outstanding items on your last reconciliation against the bank statement, and check the audit trail for outstanding items not appearing on the reconciliation. If you find any items that haven't cleared the bank and aren't on the outstanding list, then the ending balance entered in the first window needs adjustment. Subtract outstanding checks and add outstanding deposits to the ending balance. Think of it this way - since you can't tell the computer that these items are outstanding, you adjust the statement ending balance as if the items had cleared the bank. This adjustment is no longer necessary in the month that items actually clear the bank. Remember, you must leave the bank reconciliation window in order to adjust the statement balance in the first window, so save your work. Also, print a report showing the difference and the outstanding items, cleared items, or both. Use these reports to work from when you return to the bank reconciliation window.   Basic Concepts in Bank Reconciliation • Any item which is not outstanding must be marked as cleared. The bank reconciliation doesn't look at items after they're cleared, it only calculates outstanding items. If an entry appears that doesn't belong and isn't outstanding, mark it as cleared. Research it later; marking it as cleared doesn't affect the database outside of the reconciliation. • Journal entries listed in the bank reconciliation must match what the bank is showing for service charges, automatic payments, miscellaneous credits, bank card discounts, etc. • Compare the amounts on the statement and last month's outstanding list with the items in the bank reconciliation window. Banks can make mistakes and enter the wrong amount. And it's possible for a user to enter the wrong information on a hand-written check or JE. • The G/L balance is up-to-the minute, so it's important that any activity, debits and credits, entered after the statement date, is listed as outstanding. • If you have not used Client & Profits to reconcile for a long period of time, remember the goal is to subtract outstanding items from the statement balance, and reconcile that amount to the checkbook. If you've been balancing manually and the G/L has been in balance with the bank, you'll choose the option to "clear all items," then mark as outstanding the items you would have listed manually. • If the G/L has never balanced with the bank, the problem is out of the scope of this FAQ. The out-of-balance needs to be corrected before a reconciliation can be saved. To resolve the out-of-balance, a good report is the audit trail. Choose G/L > Print Reports. Print the audit trail for your checking account for the whole year and match it up to your bank statements.   Search the Daily Q&A database