Businesses ranging from small ventures to large enterprises undertake several transactions, often in thousands, making it difficult to keep track of all of them. They require comprehensive bookkeeping practices to ensure that their records tally with those of the bank account and credit card account to which the businesses have been linked. QuickBooks Desktop provides efficient tools to keep track of the list of transactions and tally them with the right accounts. This process called reconciliation of transactions in QuickBooks can be automated. In this blog, we will see how to reconcile in QuickBooks.
Need for Reconciliation in QuickBooks
While the obvious necessity of reconciliation is to ensure that account statements with various stakeholders’ tally with the actual income and spending, it is how well the information is captured that makes all the difference.
Very often, businesses tend to overlook small amounts that are accrued through interest earned and service charges apart from bank charges. QuickBooks provides efficient methods to capture these details as well.
Things to Do Before Bank Reconciliation on QuickBooks
Before we can understand how to reconcile in QuickBooks, let us run through the broad measures to be taken before reconciling a bank account on QuickBooks.
- Take backups of your company file on QuickBooks.
- Select the account you want to reconcile and ensure that the beginning balance is correct.
- Enter the transactions that have not yet been cleared.
- Generate copies of the bank statement/ credit card statement and generate the reconciliation report.
How to Reconcile in QuickBooks – Explained
There are two important screens to note during the reconciliation process in QuickBooks.
The first screen is where users begin the reconciliation process. It is here that they ensure that the data entered is complete and accurate. Users will reach this screen from the Settings drop-down menu under Tools.
It is in the reconcile window that you have to select the account you want to reconcile and then enter the Ending Balance. The Statement end date is pre-populated with 30 or 31 days after the last reconciliation. The date field can be edited if needed. Similarly, the Beginning Balance is calculated as the sum of all previously cleared transactions.
The reconciliation window also allows users to manually enter any Service Charge and Interest Earned that may have been unaccounted. Select Locate Discrepancies to identify records that don’t match. The other option, Undo Last Reconciliation can be used if discrepancies cannot be tracked or the date of the opening balance has to be changed. On clicking the button, all previously reconciled transactions will be reverted.
Click on Continue if the information is correct.
The next screen is where you will see more granular statement information where transactions can be cleared. Ideally, the difference between the total appearing in this window and the bank statement should be zero. You can confirm that the records tally by clicking on Reconcile.
This screen has buttons for performing other actions too.
If you are late reconciling the records, you can hide the transactions that have occurred after the statement period for which you are reconciling the records. If there are still too many transactions, they can be resorted by clicking on the title/ header of the column.
The Mark All/ Unmark All button selects or deselects all transactions. Selecting all transactions saves time when several balances have to be cleared at a time.
The Go To button allows you to find and edit specific transactions before you reconcile.
You can specify the visible columns on the screen using the Columns to Display button.
Any information that has to be corrected can be done so using the Modify button.
Under exceptional circumstances, when you may have to abandon your reconciliation, click on Leave. Doing so will result in an asterisk (*) being displayed against the column of transactions.
The last button is Reconcile Now. Click on this button to confirm that you have cross-checked your data.
However, if there are any discrepancies, use the Reconciliation Discrepancy Report to adjust.
Why QuickBooks Desktop is Best for Bookkeeping?
Now that you know how to reconcile in QuickBooks, it is not difficult to comprehend why QuickBooks Desktop is the best software for bookkeeping. QuickBooks reduces mundane transactions cross-checking tasks to simple button clicks. Filing taxes couldn’t have been made simpler. If you plan to migrate to QuickBooks Desktop, Apps4Rent is your perfect partner to bring you the power of QuickBooks on the cloud. Contact us to know more.