What is the process of matching your checkbook register with a bank statement?

Answer 1

The process of comparing a checkbook register with a bank statement is generally called a "bank reconciliation".

Assume that you started business on January 1 and have just received your January 31 bank statement.

Make a reconciliation worksheet, with the beginning balance equal to the ending balance shown on the January 31 bank statement. Then compare everything in your check register to the items on the bank statement.

Check that all January deposits you recorded in the register also appear on your bank statement. Any deposits you made that hasn't "hit" the bank yet is called Deposit in Transit (DIT). Add total DIT to the bank balance, because the bank balance is "short" by that amount.

Checks you wrote in January: Compare the check register with the checks that appear as cashed on your bank statement. Any check that is in the register but has not yet been paid by the bank is an "outstanding check". Make a list of all outstanding checks and get a total, Subtract the total of outstanding checks from the beginning bank balance.

Then, adjust your check register for fees that the bank deducted or interest the bank paid that you did not record in the register during the month. Record those items on the register to get an adjusted register balance.

Finally, put it all together:

Bank ending balance

+ Deposits in transit

- Outstanding checks

SHOULD = The balance in your checkbook. If your actual checkbook balance does not equal this number, you either made a mathematical error or you missed something in the reconciliation process. Do it again.