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Chapter 15
Chapter 16
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Chapter 18
Chapter 19
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Chapter 22
Chapter 23
Chapter 24
Chapter 25
Chapter 26
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Chapter 28
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Chapter 5

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Reconciling: what happens

Reconciling XE "reconciling:bank account"  a bank account has often been found to be a fearsome process, because of its unusual, strong demands.  This process requires clear thinking, plus an understanding of what is happening. The sequence is explained here, and you may want to read all of it before starting.  Opening the Reconcile window is almost the last step in this process. I am sorry that I cant help you with the other requirement, which is to arrange a time free from interruptions and distractions.  The good news is, once you get rolling with QuickBooks, provided that data entry is accurate, reconciling is fast and easy.

Reconciliation means getting together.  The bank statement says one thing, the check register says another, and you need to know how much money you really have.  The reconciliation process in QuickBooks follows an approach that is natural in computer programs.  It amounts to demonstrating that QuickBooks can duplicate your bank statement.  Understanding the reconciliation process begins with knowing that almost all transactions are labelled as being in one of three states:

Not Cleared is a transaction that eventually will effect your bank account, but has not yet been reported in a bank statement.

Cleared refers to a transaction reported in a bank statement.  In addition, a rare few transactions will never appear on the bank statement.  If a transaction has been recorded, and then nullified by a reversing transaction, you might be certain that neither will ever appear on your bank statement.  They would add to zero, and both would be marked as cleared, because you are not waiting to see them on the statement.

Reconciled applies to a transaction which has been recorded as cleared, and has gone through the reconciliation procedure. This is now historical.

Online banking or online payment transactions are recorded in a fourth state, described in Chapter 21.

The reconciliation screen starts with an Opening Balance.  It should be the same as the ending balance from the previous bank statement, and the beginning balance of the current statement.  This number is not stored in any memory cell.  It is calculated, when reconciliation is started, as the sum of all historical (previously reconciled) transactions. 

Current transactions occupy most of the area in the Reconcile window.  Current includes transactions not cleared, or those cleared but not previously reconciled.  The Ending Balance is also entered.  The program adds all cleared deposits to the beginning balance, and all payments are subtracted.  The result should be the ending balance, and a Difference is shown at the bottom.  When the difference is zero, hooray!  Reconciliation is successful.  QuickBooks has proven that it can indeed duplicate your bank statement. You can have faith in your current balance, which is then the banks ending balance, as adjusted by recent transactions.

The transactions displayed in the Reconcile screen are current (not historical) transactions, of all dates.  Some users want to display only uncleared transactions up to the statement date.  There are two reasons for showing them all.  To show only transactions up to a cutoff date would be one more complication in the program, and one more opportunity for problems. From the user viewpoint, if a transaction is recorded but not cleared, that is the only pertinent fact. It is recorded but not cleared.  For reconciliation, the date of recording does not make any difference.

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Last modified: May 21, 2004