Bank reconciliation: a worked beginner example

What are you trying to prove?

Bank reconciliation checks the bank-related entries in your books against the statement and explains differences. It helps identify missing entries, duplicates, timing differences and mistakes. Matching the closing numbers without explaining the items is not enough.

Work through a small example

Suppose your books show ₹50,000 in the bank account at the end of a period, while the statement shows ₹49,800. You find a ₹200 bank charge on the statement that has not been entered in the books.

After verifying the charge and recording it appropriately, the book balance becomes ₹49,800. The difference is explained by evidence, not by an unexplained balancing entry.

If instead the difference is an uncleared payment, record the timing explanation and follow up in the next period. The treatment depends on the actual transaction.

Use this process

1. Start with the previous reconciled balance.
2. Match statement entries to book entries using amount, date and reference.
3. Mark unmatched items on both sides.
4. Investigate fees, failed payments, transfers and duplicates.
5. Record supported corrections with an explanation.
6. Retain the reconciliation and an outstanding-item list.

Watch for transfers

Moving money between two business bank accounts is not automatically income or an expense. Match both sides of the transfer and keep the references together. Reconcile each account individually so a missing entry is visible.

Have another person review unfamiliar or material items when possible. A clean reconciliation is a control, not a guarantee that every transaction elsewhere in the books is correct.

Next: Use a monthly bookkeeping checklist.

Take the next step

Return to the beginner learning paths. If you want help applying this to your records, explore our bookkeeping service.