- Last Updated on:   Dec 11th, 2019
- Posted by: QB
- Category: QuickBooks
Reconciling bank and credit card accounts assists the users in catching any irregular, incorrect or unidentified transactions that might end up in wrong account balance. Reconciliation is the process in which the user can compare the financial transactions that are entered in the QuickBooks software with the bank/credit card company’s records. The QuickBooks experts recommend to reconcile the bank & credit card accounts in QuickBooks software on a regular basis, as this will ensure the accuracy of accounting records. Many users are unaware of the benefits of reconciliation. Reconciling the bank and credit card accounts assists the users in the following ways:
- QuickBooks accounting software accounts for all the financial transactions, which includes payments, reports, deposits, statements, and bank fees.
- Also, with the help of reconciliation, all the financial transactions that are present in the QuickBooks bank register, along with their ending balances, tally with the actual bank or credit card account.
Reconciling is a step by step process, and in this article we will be explaining the entire process in detail to Reconcile Bank and Credit Card Accounts in QuickBooks. If you want to understand the step by step process of bank and credit card account reconciliation in QuickBooks software, then stick to this blog till the end.
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Before you start reconciling the account, keep the following points in mind:
- Make sure to have the copy of the bank or credit card statement.
- Take the backup of the QuickBooks company file.
- The next point to remember is to type in all the uncleared financial transactions for the statement period.
- Also, the user is required to set up the bank/credit card account in QuickBooks accounting software that too with the accurate beginning balance, in order to avoid any nuisance.
Steps to Reconcile Bank and Credit Card Accounts
Once the user begins with the process, he/she will witness two main screens on the system.
1. Start Reconciliation Window
In this particular window, the user is required to select the bank account to reconcile & also analyze all the details that are associated to it. It should also be noted that all the important information present in the window is correct, before jumping to the next step.
To visit the Begin Reconciliation window, the user is required to visit the “Banking” menu, followed by hitting the “Reconcile” tab.
Steps to be followed by Users having QuickBooks Merchant or Payments account:
If QuickBooks Desktop detects that you are not signed in to the Payments account, then in that case a Sign In prompt will show up on the screen. This is to make sure that the account is effectively signed in, and also connected to a legitimate company ID.
- To begin with, in the “Account” section, the user should select the bank/credit card account that is supposed to be reconciled.
- It should be noted that the Statement Date will be filled on its own. In general, it supposes to be 30 or 31 days, after the statement date that the user entered for the earlier reconciliation. The user can alter the date as per the requirement.
- Also, the Beginning Balance will get filled in automatically, which will be the total of all formerly cleared transactions. The user is required to make sure that the beginning balance is equal to the opening balance as per the statement.
- The next step is to type-in the corresponding balance from the statement, in the “Ending Balance” section.
- In case the financial reports display a service charge/interest that you haven’t yet type-in into the QuickBooks records, then mention those amounts into the “Service Charge” and “Interest Earned” field respectively. Also, DO NOT type-in the charges that have been previously typed-in as QuickBooks financial transactions.
- Moving ahead, the user should click the “Locate Discrepancies” icon, in order to find out the available financial reports that will assist the user to locate discrepancies & other reconciliation problems. There is an option to “Undo” & “Restart Reconciliation” tab at the “Locate Discrepancies window”.
- The last and final step is to click on the “Undo Last Reconciliation” button, in case the fixation requires by you to revert to the former reconciliation.
What is the need to undo last financial reconciliation?
The need to undo the last financial reconciliation arises when the user can’t figure out the discrepancies during QB reconciliation or if the user wishes to change the date of the opening balance. Also, it should be noted that after the user undo the earlier reconciliation, the beginning financial balance will revert to the preceding beginning balance & all the previously cleared financial transactions will be uncleared.
- If all details are right, click on the “Continue” tab, in order to carry on to the Reconcile window.
2. Reconcile Screen
Now comes the reconcile screen, where you will be able to refine the preference that is to be matched against the bank statement. This is where the user selects the financial transactions to clear. If a zero difference is displayed on the screen, once the user selects all the financial transactions that show on the statement, then congratulations! This enables you to simply click on the “Reconcile” tab and also this completes the reconciliation.
- Hide financial transactions after the statement’s end date: The is required to put the confirmation mark in the box, if the user desires to display the financial transactions covered only by the statement period on which the task is performed. This will help the user to avoid perplexity, especially if the user is “behind” in the reconciliation process.
- Type-in the Transactions in QuickBooks: These are listed & separated into two fields – the Checks and Payments (Money out) and Deposits & other Credits (Money in).
- If the user is reconciling the credit card account, then in that case the fields will be Charges and Cash Advances (purchases) and Payments and Credits (payments to the credit card company).
- Now, the user will be required to authenticate the financial transactions against the actual bank or credit card statement.
- Followed by selecting only the one that appears on the statement & also ensure that the amounts are identical.
- Lastly, it should be noted that as the transactions are selected, the Cleared Balance changes.
What if there are manifold Financial Transactions?
In such case by default, the financial transactions are scheduled as per the date. In case there are a lot of financial transactions for statement period, the it might be easier for the user to resort transactions, especially if he/she is trying to spot a transaction with a specific amount, reference, etc.
- The first step in this process is to click once, and it will automatically sort the financial transactions.
- And then clicking on it for the second time, will reverse the sort.
- For example, if the user wishes to organize the financial transactions according to the amount, then he/she is supposed to click on the “Amount” column header.
- The financial transactions are rearranged in ascending or descending sequence.
- Items marked as clear: This field shows up the total number, total amount of Deposits, and also Check selected by the user. Certain banks endow the identical summary of the financial transactions on their statement. This section saves a lot of time for the user, if the user wishes to verify for the discrepancies.
- Mark All/Unmark All: When the user will click on any of these buttons, he/she will select/deselect the financial transactions. If the user reconciles on a customary basis, and if all transactions for the statement period were entered correctly, then selecting all the financial transactions at once might contribute to save time. The user is required to ensure that the reconcile window shows a zero difference between the ending balance and cleared balance.
- Go To: This section opens or edits the financial transaction from the reconciliation screen. It is helpful in case when the user wishes to do small edits on the financial transaction, before the user marks it reconciled or cleared.
- Matched: If the account that the user is attempting to reconcile is setup for online banking, then in that case he/she is supposed to click on this button and it will automatically choose the financial transactions that were downloaded & auto-matched.
- Columns to Display: Selecting this specific button will allow the users to opt for the sections that the user would like to display.
Now question comes that why it’s necessary to select columns?
QuickBooks software displays the Date, Amount, Payee, and CHK # columns by default. But the exception is only for the Amount column, the user can add or remove the other areas to avoid perplexity. For example, in case the statement demonstrates the reference # for most of the financial transactions, then the user can select to present only the CHK # & AMOUNT columns. With the help of this method, the user can simply spot and mark the financial transactions.
- Modify: The user can press this tab, if the user wishes to make modification at the last moment on the details/information’s that the user has typed in to the Begin Reconciliation window.
- This field endows the user with a peep of the reconciliation figures.
- Service Charge, Ending Balance, and Interest Earned: All of them are based on the amount entered for these areas in the Begin Reconciliation window.
- Cleared Balance: The figure reduce when the users select/clear the checks and payments & increases when they select/clear the deposit and other credit amount.
- Difference: This allows the user to find out the difference among the beginning balance that was entered and the cleared balance (the financial transactions that was selected up till now). Also, it should be noted that as per the ideal conditions, the difference should be null.
- Leave: The user is required to opt for “Leave” button, in order to operate other account or to edit financial transactions after moving out of the reconcile window.
What will happen after clicking on the “Leave” button?
QuickBooks accounting software tracks the financial transactions already manifested as clear – that is, they remain checked in the Reconcile window. The user is supposed to visit the account register, an asterisk (*) will appear in the cleared column of the financial transactions that the user has marked until the reconciliation process completes. The asterisk symbol depicts that the financial transaction is awaiting or pending due to QuickBooks bank account reconciliation with the financial statement hasn’t finished completely.
When the user is prepared to resume the reconciliation process, he/she will be required to go back to the “Begin Reconciliation” window, and also re-enter the beginning balance & proceed with reconciliation as usual
- Reconcile Now: The user can opt for the “Reconcile Now” button in a situation when the process of selecting all the financial transactions completes.
If the difference is zero: QuickBooks software will save the reconciliation & shows the “Select Reconciliation Report” window. The user is then required to select the category or type of report and later perform click on either the “Display” or the “Print” tab. The user should select the “Close” tab, if you want any financial reports at this point of time.
QuickBooks software allows the user to select among the “Reconciliation Summary” or “Reconciliation Detail” report, or the user can select both of them. Though it doesn’t show after the user finishes the reconciliation process, the ‘Reconciliation Discrepancy Report’ is also available in QuickBooks to assist him/her to figure out any problem or issue that occur while reconciling the account.
If the difference is anything but zero: QuickBooks software shows the “Reconcile Adjustment” window. The user can select from the following:
If you want to find the journal entry, you can:
- Return to Reconcile: To go back to the earlier window.
- Leave Reconcile: To move out of the reconciliation window, in order to review or edit existing financial transactions that are causing the issues.
- Enter Adjustment: If the user would wish to finish the reconciliation procedure even if he/she didn’t get a zero difference on the preceding window. QuickBooks software will automatically type-in the Journal Entry under a special expense account known as Reconciliation Discrepancies. It can be verified & edited as required by going to the Chart of Accounts.-
- Use the Find feature.
- In the “Edit” menu, click on the “Find” tab.
- In the “Find” window, navigate to the “Advanced” tab and choose the “Memo filter” icon.
- Under the “Memo” section, enter the “Balance Adjustment” and later, click on the “Find” tab.
- Any balance adjustment will be displayed.
- See the Previous Reconciliation report.
- In the “Reports” tab, click on the “Banking” tab => “Previous Reconciliation” tab.
- Under the “Cleared Transaction” field, the “General Journal Entry” will appear at the top in a situation where the balance adjustment was made
- Use the Find feature.
For Credit Card Accounts: If the ending balance is anything except zero, QuickBooks software will pop-up the “Make Payment” window & redirect to write a check or enter a bill to pay for the outstanding balance. If you do not desire to record payment, you can click on the “Cancel” tab.
3. Reconciliation Discrepancies
The user might come across technical hassles while reconciliation of the bank/credit card account. Discrepancies are mismatches caused by financial transactions in the account that don’t agree with your printed statement.
Below are two of the available resources dealing with mismatches and other reconciliation issues?
- Zero or incorrect Beginning Balance in the Begin Reconciliation Window
- Fix reconciliation discrepancies
With this we end the article here, and also hope that with this technical article you will be enlightened with deep knowledge about the bank & credit card reconciliation.
However, if the user is still confused or have any queries, then he/she can feel free to take the advanced assistance of the QuickBooks certified technicians and ProAdvisors. You can dial our QuickBooks enterprise customer support helpline .i.e. +1-800-880-6389.
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