11.1 - Bank Reconciliation

-You have monies going both in and out of a bank. Usually you know about it before the bank does. Outbound money is usually in some sort of expense or outbound payment. Inbound money usually comes from deposits, sales, investments, getting money from somewhere. 

-You record all of these transactions as they happen in the system - you pay a bill, you have a sales transaction - and that is its starting date, that starts an objects life cycle.

-The bank reconciliation portion of this is when does the bank recognize this transaction. When does the bank account for monies going in or out, being added or subtracted to the account.

-There are all kinds of times when there is a discrepancy when something actually happened and when the bank records it as happening. Some examples are you write a check, put it in the mail, and it takes a few days for the check to be cashed and monies to be withdrawn from your account. You make a deposit over the weekend and it sits through the weekend and a holiday until it is deposited into your account and the bank adds that. Someone purchases something using a credit card and those monies get combined with other credit card monies and those get batched and processed together and may take a couple of days to process with a fee reduction.

-There are all kinds of disconnects so bank reconciliation is putting a second date on the transactions so you can say when the transaction actually started or was implemented and the date that it actually becomes live in the bank.

-Often for bank reconciliation you will need both Adilas and your online banking or a printed bank statement in front of you so that you can match pieces up. If you are planning on going clear to a balance sheet level make sure that you have reconciled your bank before you ever try to balance your balance sheet. If you are going to balance your balance sheet the two pieces you want to ensure you have done before you start that are your bank reconciliation and your inventory reconciliation. Essentially making sure you have tracked things well and the needed information has been verified and accounted for.