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This free tutorial is part of our QuickBooks Online courses and is designed to help you get the most value out of QuickBooks Online, our top-rated small business accounting software. We suggest reading this guide while following along in your account. If you don’t have one, you may start with a 30-day free trial or get 50% off for three months. Visit QuickBooks Online Step 1: Navigate To Bank Reconciliation in QuickBooks OnlineFrom the left menu bar, hover over Accounting, then click on Reconcile, as shown below. Navigate to the reconciliation window in QuickBooks Online Step 2: Select the Bank Account to ReconcileChoose the bank account you want to reconcile in QuickBooks, then enter the ending account balance and date from your bank statement. You can also add the service charge and interest earned—if they aren’t already in QuickBooks. Enter information for bank reconciliation in QuickBooks A. Account: Choose the bank account you wish to reconcile from the drop-down menu. B. Beginning balance: This is the beginning balance of your bank account, and it must agree with your bank statement. In subsequent months, it’ll roll over automatically from the prior month’s ending balance. Our sample account above shows a beginning balance of $1,057.37. Difference in beginning balance: Once a transaction has been reconciled, the amount should never be changed in QuickBooks. If it is, the beginning balance on this screen won’t match the beginning balance on your bank statement. When this occurs, QuickBooks will provide a warning that the beginning balance is off and provide a link for help identifying the previously reconciled transaction that has changed. C. Ending balance: Enter the ending balance from your bank statement. D. Ending date: Indicate the ending date of your statement period. E. Service charge fields: Input a service charge’s date and the amount and the expense account to be charged if it isn’t in the system yet. F. Interest earned fields: Add the interest earned on your bank balance that hasn’t been entered. When you’ve entered all the information from your bank statement, click the green Start reconciling button to continue. Step 3: Begin Matching TransactionsThe QuickBooks reconciliation screen contains a summary of cleared transactions at the top and a detailed list of transactions at the bottom. QuickBooks bank reconciliation screen before reconciliation
Trace the transactions from the detailed list to your bank statement. When you have a match, click the radial button next to the transaction and place a checkmark next to the transaction on your bank statement. When you click a radial button, the transaction will be reflected in the summary of cleared transactions at the top of the screen. Problems tracing deposits: The deposits on your bank statement will likely have multiple checks grouped into a single transaction, particularly if you deposited the checks directly to your bank. When you make multiple deposits in one go, your bank will record them as a single deposit, which shows up in your bank statement. As a result, it’ll be difficult to trace these itemized transactions in QuickBooks to your bank statement. To avoid this problem, we recommend using the Undeposited Funds account to deposit customer checks, where they’ll later be grouped into a single bank deposit, as shown in how to receive payments in QuickBooks Online. Step 4: Confirm the Bank Reconciliation Has a Difference of ZeroTo complete the reconciliation process, you must verify that the difference is zero.
Here’s an example of the completed reconciliation for Paul’s Plumbing’s Bank of America checking account: Completed reconciliation in QuickBooks Online Step 5: Review and Save QuickBooks Bank Reconciliation ReportsAfter clicking Finish now, QuickBooks will display a confirmation with a link to view the reconciliation report. QuickBooks bank reconciliation confirmation message Click View reconciliation report to view the report. The top of the report will display summary information similar to the top of the reconciliation screen. Perhaps the most useful information on the report is the list of uncleared, or outstanding, checks and deposits, which you’ll find at the bottom. Reconciliation report in QuickBooks Online You should review this section every month to make sure these uncleared transactions make sense. Tip: We recommend paying close attention to any outstanding checks that are getting very old, perhaps three months or more, to avoid overdraft problems, inaccurate accounting, and the need to report or remit outstanding check amounts to the government. If you find one, then you should contact the vendor or employee to see if the check has been received. If it hasn’t, you need to void the check and reissue a new one to the payee. 8 Troubleshooting Tips for Bank Reconciliation in QuickBooks Online1. Verify Beginning Balances EqualThe beginning balance in the summary at the top of the QuickBooks reconciliation screen must equal the beginning balance on your bank statement. If you reconciled the account successfully in the prior month, yet your beginning balance doesn’t match your bank statement, then a previously cleared transaction has changed. QuickBooks will provide a link on the screen where you input the statement summary to help you find the changed transaction. 2. Start From the BeginningIf this is the first time you’re reconciling this account, the beginning balance in QuickBooks will be zero. Make sure you’re using the very first bank statement for that account. You may have to go back many months and then move forward, reconciling one month at a time. If it’s impossible to start your reconciliation in the first month of the bank account, you might need an experienced bookkeeper to help with your first reconciliation to get you on track. 3. Review the Bank Statement Information in QuickBooksTriple-check the statement balance, service charge, and interest income you entered from the bank statement. Make sure the service charge and interest income are only entered during the reconciliation if they aren’t already in QuickBooks. 4. Look for Your Exact DifferenceIf your difference is, for example, $21.50, then look for a transaction for this amount on either your bank statement or the QuickBooks list of transactions. You can click on the amount column in the QuickBooks reconciliation screen to sort the transaction by amount. 5. Balance One Transaction Type at a TimeMany bank statements will separately summarize deposits and withdrawals as does the summary at the top of the QuickBooks reconciliation screen. First, try to match total bank deposits to total QuickBooks deposits by reviewing only deposit transactions. Then, match total withdrawals from QuickBooks and the bank statement. 6. Investigate Unmarked Transactions in QuickBooksDouble-check that all the unmarked transactions in the reconciliation window don’t appear on the bank statement. If the transaction is on your bank statement, then the radio button should be marked in the reconcile window. 7. Investigate Unmarked Transactions on Your Bank StatementVerify that all transactions on your statement have been matched to QuickBooks. Add any transactions that are missing from QuickBooks by clicking the green Finish later button and entering the transactions as normal. 8. Take a BreakIf you have been at it for a while and you need a break, QuickBooks allows you to pick up where you left off. Click the Finish later button to save the work you have done so far. Sometimes, taking a breather can help you spot what’s causing the difference. The most important thing you can do to keep your reconciliations simple is to do them monthly, shortly after receiving your bank statements. The longer you wait to reconcile your accounts, the more difficult it will be. Why Bank Reconciliation in QuickBooks Is ImportantBank reconciliations in QuickBooks Online will help ensure the number and amount of your transactions are correct. You’ll find that most discrepancies between the bank and your QuickBooks records are bookkeeping errors or omissions. For instance, forgetting to record automatic withdrawals in QuickBooks is a common mistake, and banks do occasionally make mistakes as well—so it’s imperative to stay vigilant with your reconciliations. A bank reconciliation will also catch any fraudulent transactions in your account since they won’t be recorded in QuickBooks. Reconciling your bank accounts in QuickBooks accomplishes three main things:
Wrap UpYou now understand the importance of bank reconciliations and how to complete them in QuickBooks Online. The next lesson in our series of QuickBooks tutorials is how to manage downloaded credit card transactions. It will teach you how to review, classify, and accept or exclude transactions that are imported automatically from your connected credit card accounts. What 2 items are used to reconcile a bank account?To do a bank reconciliation you would match the cash balances on the balance sheet to the corresponding amount on your bank statement, determining the differences between the two in order to make changes to the accounting records, resolve any discrepancies and identify fraudulent transactions.
What are the two sides that we reconcile on a bank statement reconciliation?With every transaction in the general ledger, the left (debit) and right (credit) sides of the journal entry should agree, reconciling to zero.
How do I reconcile a bank statement in QuickBooks Online?Get your bank statement and then follow the steps below:. In QuickBooks Online, select Settings ⚙ and then Reconcile. ... . From the Account ▼ dropdown, select the account you want to reconcile.. Review the Beginning balance. ... . Enter the Ending balance and Ending date on your statement.. How does bank reconciliation differ in QuickBooks Online?Run a Reconciliation Discrepancy report. Go to the Reports menu. Hover over Banking and select Reconciliation Discrepancy.. Select the account you're reconciling and then select OK.. Review the report. Look for any discrepancies.. Talk with the person who made the change. There may be a reason they made the change.. |