When having the bank statements in your hand, you will have to compare each transaction with the entry you entered in your QuickBooks account. If every transaction matches with the bank statement, it is a direct indication your account is accurate and balanced. Moreover, it is recommended to reconcile your account regularly. If you are not having any clue how to reconcile a bank statement in QuickBooks Desktop or QuickBooks Online, we will help you to understand through this guide.
- How Do You Reconcile a Bank Statement in QuickBooks Online?
- 1: Check the Opening Balance
- 2: Start the Reconciliation
- 3: Compare the Statement with QuickBooks
- 4: Check the Past Reconciliations
- How to Reconcile a Bank Statement in QuickBooks Desktop?
How Do You Reconcile a Bank Statement in QuickBooks Online?
To get started with account reconciliation in QuickBooks, one has to review the opening balance. Only after that, you can start reconciling a bank statement in QuickBooks. After you successfully reconcile your bank statements with the QuickBooks transactions, you can review the past reconciliation(Undo a Reconciliation in QuickBooks) by running a reconciliation report. Let’s continue to learn how to reconcile a bank statement in QuickBooks Online in the following steps:
1: Check the Opening Balance
If you are performing reconciliation for the very first time, it is suggested to review your opening balance before getting started. When you start tracking the transactions in your QuickBooks account, the opening balance should match the balance of your bank account.
QuickBooks will automatically download transactions and enter the opening balance if you have already connected your credit cards and bank to online banking. However, if the bank and credit cards are not connected to the online banking then you will have to manually enter the opening balance.
To enter the opening balance manually in QuickBooks Online, you can pursue the following steps:
- Navigate to the “Settings” menu to open QuickBooks settings.
- Then, click on the “Chart of Accounts” option.
- Choose the “New” button.
- Here, you can enter the following details:
- Account Type
- Detail Type
- Other details can also be added such as “Default Tax Code”.
- Now, you can decide when you would like to start tracking the finances. For this, you can go to the “Balance” field and add the amount to your account. Also, check the “As of date” field. Make sure you add today’s date if you are thinking of starting tracking right now.
- After that, click on the “Save and Close” button.
As you enter the opening balance, you can continue tracking the new QuickBooks transactions that occur after the date of the opening balance.
2: Start the Reconciliation
Now that you have the monthly credit card and bank statement, the reconciliation process can be started. If you are planning to reconcile multiple months then make sure you start with the old statement. Thereafter, you will have to do one statement at a time by reconciling each month separately. To start the reconciliation process, learn here how to reconcile a bank statement in QuickBooks:
- First of all, you have to be sure that the downloaded transactions should be matched and categorized if you have connected your accounts to online banking.
- Then, go to the “Settings” icon in QuickBooks Online.
- Choose the “Reconcile” option. Those who are reconciling for the first time can click on the “Get Started” button to continue.
- Click on the “Account” drop-down menu and choose the account for reconciliation. The account should be the same on the statement.
Note: While performing the reconciliation, if you see any message for the previous reconciliation, you should click on the We can help you fix it. It is important to fix the reconciliation before getting started.
- Now, you can review your “Beginning Balance”. Also, you have to be sure that the beginning balance matches the balance available on the statement.
- After that, enter the “Ending date” and “Ending balance” on the statement. You may also find the Ending balance option with different names such as Closing balance and New balance.
- If you find the option to review your “Last statement ending date”. This is the end date of the last reconciliation. Please remember the current bank statement should be started the day after.
- When done performing these steps, click on the “Start reconciling” button.
By following these steps, the reconciliation process will start. Thereafter, you can compare the statements with your QuickBooks account.
3: Compare the Statement with QuickBooks
At this moment, you are required to compare the transactions specified on the statement. Make sure you check each transaction one by one; the transactions and dates should be matched properly.
However, it depends on what kind of account you are using for reconciliation. As specified earlier, QuickBooks will automatically download transactions and enter the opening balance if you have already connected your credit cards and bank to online banking. Hence, your accounts remain balanced. On the other hand, not every user prefers to connect a bank account with online banking. If you are not connected to online banking, you can still reconcile the accounts.
Whether you reconcile accounts connected to online banking or not, you can follow the instructions depending on your preferences.
- Get started with the first transaction available on the statement.
- Then, go to the “Reconciliation” window and locate the same transaction in QuickBooks.
- After that, you can compare both transactions. If they match with each other, you are supposed to place a checkmark next to the amount. This will mark it as a reconciled account in QuickBooks.
- In case the transaction does not show up on the statement but it shows in the QuickBooks account then do not place any checkmarks.
- This way you can continue comparing each transaction on the statement with the QuickBooks transaction.
- Once you reach an end, the difference between QuickBooks and statements should be $0.00. If you see the zero difference then click the “Finish Now” button.
- If required, you can even choose the “Enter a bill” or “Pay all or a portion of the bill” option.
After matching the records, if you find something that needs to be edited such as payee then just need to click on the Edit button and make the required changes so the information can match the statements. In case you don’t see the $0.00 difference then you should fix the reconciliation.
4: Check the Past Reconciliations
Once you are done reconciling your accounts, you can check your work by reviewing the reconciliations. For this, you can run the reconciliation report. Here are the steps for that:
- Click on the “Accounting” menu.
- Then, click the “Reconcile” button.
- Here, you can choose the date range and account using the dropdown menus.
- If required you can export or print the reconciliation report to share.
This is how you can complete the steps for reconciling a bank statement in QuickBooks Online. Later you can run the reconciliation report to review the past reconciliations. If any changes are required, you can edit the completed reconciliations in QuickBooks Online.
How to Reconcile a Bank Statement in QuickBooks Desktop?
Like QuickBooks Online users, it is equally important for QuickBooks Desktop users to reconcile their accounts. To start the account reconciliation process, you need to check the opening balance first. If it is correct, you can start the reconciliation. During the reconciliation, you need to take care of the bank statement and transactions; even the date should be matched. Thereafter, you can compare the bank statement to verify the reconciliation. If required you can review the details by running the reconciliation report.
Let’s perform each step and learn how to reconcile a bank statement in QuickBooks Desktop. Make sure you take a backup of your QuickBooks company files.
1: Review the Opening Balance
The first step is to check the opening balance especially if you are performing reconciliation for the very first time. Now, it depends on which type of account you want to enter the opening balance. It could be for (credit card or banks accounts) and (liability, asset, and other accounts)
To enter the opening balance for a bank account, you can perform the following steps in QuickBooks Desktop:
- Make sure you have the statement or you are logged in to the bank website.
- Now, launch the “QuickBooks Desktop” and click on the “Company” menu.
- Choose the “Chart of Accounts” option.
- Here, you can click right anywhere on the “Chart of Accounts” screen and click the “New” button.
- Click the “Credit Card” or “Bank” option for the account type.
- After this, click the “Continue” button.
- Enter the name of your account. If you have multiple accounts of the same account type then make sure you enter unique names.
- Here, you can fill in the details in the fields.
- Now, choose “Enter Opening Balance”. If required you can edit the opening balance by clicking on the “Change Opening Balance” button. Please note that entering the opening balance depends on how you wish to handle the past transactions.
- Click the “Save and Close” button.
These are the steps for entering the opening balances for the credit card and bank accounts. You can also enter the opening balance for liability, assets, and other kinds of accounts in QuickBooks Desktop.
2: Prepare and Start the Reconciliation
Once you are done adding the opening balance, you need to verify if all the transactions have been entered. If you find any transactions that are not on the statement or have not cleared the bank yet, you should wait to add them.
After preparing for the reconciliation, you can start doing reconciliation. If you reconcile for several months then you should start with the oldest bank statement and reconcile each month individually. Follow these steps to start the reconciliation in QuickBooks Desktop:
- Navigate to the “Banking” menu.
- Then, choose the “Reconcile” option.
- Go to the “Account” field and choose the credit card or bank account to reconcile.
- Here, you will find the “Statement Date” automatically filled in. However, you can change it to match the bank statement.
- The “Beginning Balance” will also be entered by QuickBooks.
- After that, you can add the “Ending Balance” based on the bank statement.
- Add the “Service Charge and Interest Earned” depending on the bank statement. Make sure you don’t add the charges that you have added already in QuickBooks.
- After reviewing the field, you can click the “Continue” button or the “OK” button.
This is how you can start the reconciliation to match the details. If you find any discrepancies and the beginning balance does not match the statement then you can use the following steps to fix the problem:
- When the numbers do not match, you can click on the “Locate Discrepancies” option. This will provide a report that can be used to locate discrepancies and other issues.
- After that, you can fix the beginning balance and opening balance to fix the problem.
- In case you have to start from scratch then choose the “Undo Last Reconciliation”.
When you press the undo button, the beginning balance reverts to the balance of the previous reconciliation. In addition, all the cleared transactions become uncleared on the reconciliation.
3: Compare the Bank Statement
Now, it is time to compare the transaction list on the bank statement with the one in QuickBooks. Here, you have to be sure about the right transactions and dates. Check out the following steps to compare the bank statements:
- Start with your first transaction available on the bank statement.
- Then, go to the “Reconciliation” window and locate the same transaction in QuickBooks.
- After that, you can compare both the transactions. If they match with each other, you are supposed to place a checkmark next to the amount. This will mark it as a reconciled account in QuickBooks.
- This way you can continue comparing each transaction on the statement with the QuickBooks transaction. Once you reach an end, the difference between QuickBooks and statements should be $0.00. Then, you can press the “Reconcile Now” button.
In case the transaction does not show up on the statement but it shows in the QuickBooks account then do not place any checkmarks. You can then solve the issues and match the statement first. Later you can mark the account as reconciled.
4: Review the Account Reconciliation
When you successfully reconcile the accounts, you should check the work in the Reconciliation window. All you have to perform the following steps:
- Click on the “Display” button. This will show you the “Reconciliation” report.
- You will also see the “Print” button to print the report.
- If you want to review the reconciliation report, you can perform the following steps:
- Click on the “Reports” menu.
- Then, choose the “Report Center” option.
- After this, you can locate the “Previous Reconciliation” report and open it.
Once the report is opened, you can find all the details and summaries about your account reconciliation activity on QuickBooks Desktop.
The process of reconciliation can be tricky. Therefore, having the right information is important when you perform account reconciliation in QuickBooks. Here, we have shared the detailed guide where we discussed how to reconcile a bank statement in QuickBooks Desktop or QuickBooks Online.
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