Do you know the balance in your chequing account to the penny? Some people do and some people don't. The people who do are more likely to identify errors in their accounts if they occur and less likely to be accidentally overdrawn on their accounts.
Reconciling your account with your bank statement is the best way to keep track of your account activities. To reconcile your account, follow these simple steps:
- Record account deposits and withdrawals in your chequebook or an account book.
- When you receive your bank statement use the account reconciliation form to compare the transactions in your account book to those on your bank statement.
- Check off the transactions in your account book that match those in your statement.
- If your statement includes any transactions that are not recorded in your account book, such as account fees, record them now.
- Draw a line under the last entry in your account book, or use some other method of identifying the transactions included in this reconciliation period.
- Use the following formula to see if your accounts balance
- Start with the closing balance shown on your bank statement
- Add all the deposits you have made but do not show up on the bank statement.
- Subtract any check, payment, purchase or withdrawal transactions you have made but do not show up on the bank statement.
- This amount should match the balance you have recorded in your account book.
Reconcile your accounts regularly. If you find any errors on your bank statement, you usually have a limited period of time to report the error. After that the statement is deemed correct.
+ Outstanding deposits
- Outstanding cheques/transactions
= Account balance