A general ledger account should mirror a business checking account, because it should reflect all deposits and checks made to and from your business. A general ledger is in essence, a check register. Balancing a bank statement to a general ledger is the same as balancing a regular checkbook to a bank statement.
Verify the addition and subtraction in the general ledger, particularly if the ledger is prepared manually. This ensures that the statement total is accurate.
Compare all check amounts shown in the general ledger with the check amounts shown on the bank statement. Also, check the deposit totals shown in the general ledger with the deposits shown on the bank statement. If discrepancies appear on any of the amounts shown, determine if it is a bank error or an accounting entry error.
List any outstanding checks and deposits shown in the general ledger but not yet reflected on the bank statement. This is common for deposits that occurred near the end of the month.
Verify that any bank charges shown on the bank statement, such as miscellaneous bank charges, are also entered in the general ledger account.
Reconcile the general ledger balance to the bank balance by subtracting all outstanding checks shown in the ledger but not yet reflected in the bank statement from the bank total. Add any outstanding deposits shown on the ledger but not yet reflected on the bank statement to the bank balance total. The adjusted bank balance should then equal the ending balance shown in the general ledger.
Tip
Several software programs are available for performing bank reconciliations. Some are automated general ledger programs with built in account reconciliations.
Warning
Notify the bank immediately if you find any discrepancy between your general ledger balance and the bank balance. Most problems relate to input errors either from the bank or the person making entries in the general ledger.
