4 Methods of Accounting Reconciliation, Why Do You Need Regular Reconciliation?

4 Methods of Accounting Reconciliation, Why Do You Need Regular Reconciliation?

Accounting reconciliation/periodic reconciliation for a company is a very important part of the accounting process. It not only helps prevent errors and omissions in financial statements but also ensures that financial data is accurately presented in front of the proprietor or investor. It is worth any company’s time to complete the reconciliation work as early as possible, so how exactly should reconciliation be done?

What is an accounting reconciliation?

In the accounting process, reconciliation is an important part of bookkeeping, which means checking accounts, business-related inventory, checking capital assets, and claims, etc., to ensure that the accounts are complete, credible, and accurate.

During the reconciliation process, the quality of accounting records is ensured by rechecking and checking the data entered in the accounts, so that the financial statements can be prepared, and the follow-up accounting and auditing work can be carried out according to the fair data. However, frequent reconciliation is also recommended.

Why reconcile?

“Father of modern accounting” Luca Pacioli once said that businessmen should be vigilant like a rooster and have the habit of reconciling accounts every day. nothing.

In practice, when running a business or operating an organization, large and small economic activities may occur every day. There are also various reasons that lead to errors in the bookkeeping process and discrepancies between the actual accounts. Providing true accounting information is the basic principle of accounting., effective monitoring of this information requires regular reconciliation.

Four methods of reconciliation

1. Account verification

“Account Verification”, in short, is to verify the account records with the original accounting documents, such as documents, orders, etc., including the time of issuance, the contents of the documents, the amount involved, etc., and the two are consistent. Or consistent results can be said to be accurate accounting.

2. Account check

According to different accounting records, different stakeholders should have recorded business-related accounting information, and checking the two is called “account reconciliation”.

For example, reconciling a month’s account (monthly account) with a year’s account (annual account), or reconciling the balance of the relevant account is a method of reconciliation, and the data of the debit and credit parties should be consistent.

3. Account verification

“Account Verification” is mainly aimed at checking the book balances of all properties, resources, and creditors’ rights and debts held by a business or organization, to check whether there is consistency or discrepancy between the two.

Account verification should be done on a daily basis and monthly balance. The main internal customers include: whether the cash account balance matches the cash on hand; whether the bank deposit balance matches the bank statement balance; whether the detailed balance of each fixed asset matches the real number of assets Whether the details of the creditor’s rights and debts are consistent with the records of the counterparty, etc.

4. Account check

As the name suggests, “account check” is to check the accounts and financial statements to ensure that the accounting information is consistent with the report data to ensure their quality, which is also the basic requirement of accounting.

The above information is for reference only. If you have any questions about accounting and reconciliation work, we welcome your inquiries.

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