Question

each month, the checking account should be reconciled with the bank statement to ensure their balances agree. what are some of the items involved in the reconciliation process both from the banking and book sides? discuss.

Answer 1

In the reconciliation process of a checking account, there are items involved from both the banking and book sides. These include deposits in transit, outstanding checks, bank errors, checkbook errors, bank fees or service charges, and interest earned.

Step-by-step explanation:

Reconciling a checking account with a bank statement is an important process to ensure that the balances agree. There are several items involved in the reconciliation process from both the banking and book sides.

From the banking side, the items involved in the reconciliation process include:

• Deposits in transit: These are deposits made by the account holder that have not yet been recorded by the bank. They need to be added to the book balance.
• Outstanding checks: These are checks written by the account holder that have not yet cleared the bank. They need to be deducted from the book balance.
• Bank errors: Sometimes the bank may make errors in recording transactions. These errors need to be identified and corrected.

From the book side, the items involved in the reconciliation process include:

• Checkbook errors: The account holder may make errors in recording transactions in their checkbook. These errors need to be identified and corrected.
• Bank fees or service charges: These fees or charges need to be subtracted from the book balance.
• Interest earned: If the account earns interest, it needs to be added to the book balance.

By comparing the bank statement with the book balance and taking into account these items, the account holder can ensure that their checking account is accurate and balanced.