Company owners sometimes ask me:  “Should balance adjustments arising from account reconciliation problems cause me any concern?” 

Do QuickBooks Account Reconciliation Discrepancies Matter?

Account reconciliation is crucial; here’s why…

You want to be certain that you and your bank, credit card companies, and lenders agree on the amounts shown in your books. (If not, you may be in for some unpleasant surprises!)

Here are a few examples of why reconciliations are fundamental to financial success and security

1. Checks not “cleared” by the bank still show up as costs in your financial statements.
   If you see a number of them at year-end you’ll want to take steps to avoid IRS issues!
2. Credit card entries are considered to be “cash expenditures” as of the transaction date.
   Be sure to take advantage of these deductions within the right time frame!
3. If someone fraudulently extracts funds from your account, you only have a limited amount of time to dispute and recover those funds. You’ll rest easier knowing that you’ve reconciled to spot potential problems before they cost big bucks!

Yes, it’s time to ensure that your books agree with your bank, credit cards, and lenders! (If not, you may be in for some unpleasant surprises…)

Your account reconciliation process is simply a matching game between what you have in your accounting records and what the bank statement shows.  And, in my experience and opinion, accounts should reconcile – right down to the penny – nearly every time! 

The QuickBooks Account Reconciliation Process

1. First, you click off all matching (cleared) checks and deposits in your QuickBooks reconciliation screen that you see on your bank statement (e.g., checking or savings account, credit card or loan statement).
2. Then you record transactions shown by the bank, credit card, or lender that are not yet on your books. They will now appear on your reconciliation screen.
3. Check off these new matching transactions on the reconciliation screen. (This is critical if you want a successful account reconciliation.)
4. Finally, review the non-matching (outstanding) items on your books, such as checks and deposits not yet cleared by the bank.
   (Ask yourself, “Is it reasonable that they haven’t cleared yet?”)
5. When the cleared balance on your reconciliation screen equals the ending balance shown in your bank statement (i.e., when the difference is $0.00), you’re reconciled!

Clearing Up QuickBooks Reconciliation Discrepancies

Once or twice a year, if you have a large number of transactions clearing the account and you’re “off” by a small amount (e.g., between $.01 to $5 total),

• It’s acceptable to post an entry to increase or decrease the account you’re reconciling.
• You could assign that small, unreconciled difference (with a clear memo) to an account, such as Bank Service Charges. 
• You will then be able to clear (click off) both the correcting entry and the small discrepancies to finalize your account reconciliation.

IMPORTANT:

If you find that your accounting assistant regularly has small, unresolved differences, be vigilant and let him or her know that you are reviewing the account reconciliations closely.  Of course, follow up immediately if you see any large, unresolved differences!

More Resources Related to QuickBooks Account Reconciliations

• If you liked this blog, you’ll enjoy this one as well.
• If you’d like additional in-depth training regarding reconciliations, check out these classes:
  1. Trouble-shooting & Reconciling Bank Accounts (& Other Assets) with QuickBooks.
  2. How To Check The Accuracy Of Your Accounts Payable & Credit Cards
  3. If you have a number of bank loans, you may also wish to review: Bank Deposits, Draws & Loans (2505/Level 1)

Regards – Diane