Yes, you can balance your checkbook every month to the penny with a minimum amount of time and effort. It is very important to do so in today’s world to prevent yourself from becoming a victim of fraud and identity theft.
There are a few points to keep in mind when balancing your checkbook. First, the ending balance in your checkbook and the ending balance on the bank statement will not match due to timing. You are balancing your checkbook currently, the bank statement has a closing date which is usually printed at the top of the statement. Second, the only differences that occur between your bank statement and your checkbook are deposits in transit, deposits not recorded, outstanding checks, transfers, and adjustments. And, finally, remember that the bank is always right.
When you receive your bank statement, take your checkbook register and place them side by side. Begin with the ending balance on the bank statement. The bank statement will then list all the deposits made to your account during the time period you are reconciling for. Match the deposits on the bank statement against what you have recorded in your checkbook register. A deposit in transit is an amount that you have in your checkbook but is not listed on the bank statement due to the statement date. Add these amounts, if any, to the ending balance on the bank statement. A deposit that is not recorded is an amount that the bank shows but is not in your checkbook register. Add these amounts, if, any, to your checkbook register. This section is usually the easiest to balance since magical amounts of money don’t appear into your account. These amounts result from actual money you take to the bank, deposit transfers between accounts or payroll direct deposits.
Next, you will want to see what checks cleared the bank that you wrote from your account. These are listed on your bank statement in numerical order. Follow this order and place a checkmark next to the check listed in your checkbook register that cleared the bank. Those checks in your register that do not have marks next to them, otherwise known as outstanding checks, should be subtracted from the bank statement balance. Be alert because the check can clear for a different amount than what it was written for. Either the writing on the check was unclear or the numbers were transposed.
Other withdrawals that can occur during the statement period are debit card purchases, automatic debit payment and ATM withdrawals. Make sure that all reductions on your bank statement are entered in your check register. It is important to check this section on your bank statement and make sure it matches your checkbook since this is the area where fraud is widespread. If you know where you shopped and utilized your debit card or when and where you stopped and made an ATM withdrawal, then those transactions are the only ones that should appear on your bank statement. If other withdrawals appear on your statement that you cannot justify, contact your bank immediately!
There can be adjustments to your account such as interest, service fees and the occasional bank adjustment. Yes, I realize that I stated that the bank is always right. Well, it is. Each and every employee of a bank that comes in contact with money must balance at the end of the day. Trust me, they will find their mistake. And, they often find your mistakes too! Remember to subtract your fees and add the interest to your checkbook register.
The ending balance of your statement should now match the ending balance in your checkbook register. If the amounts are not the same, I find it is usually in the withdrawals. Specifically go over the cleared checks and the amounts they cleared for.
You work hard for your money! By following these easy directions, you can have less frustration and a better understanding of where that money goes and you can protect yourself from the many occurrences of fraud in today’s society.
By: Suzanne Globke
Posts Tagged ‘Due Date’
The Easy Way to Balance Your Checkbook
January 17th, 2010Treatment Of Bills Receivable In The Accounting Process
December 25th, 2009
Usually this agreement entered into by the buyer stipulates that payment must be made within 30 days. In recent years, the tremendous increase in the use of credit cards, issued by financial institutions to their customers, has done much to simplify these accounting transactions.
Bills, although no longer widely used, are still important in the wholesale trade and in foreign transactions. Bills have certain characteristics that make them negotiable documents. A financial document is negotiable if it can be transferred from one person to another. This is achieved by the holder endorsing the document and delivering it to the other party. Bearer documents are transferred by delivery alone. To be negotiable, a financial document or bill must have the characteristic that, under given circumstances, the owner’s rights are unalienable, even though his predecessor’s rights were defective or invalid.
A bill is a negotiable document in the accounting process. It is an unconditional, written instruction issued by one person to another whereby the latter is instructed to pay on demand, at a specified or specifiable future date, a certain sum of money, either to the order of the person specified, or to the bearer.
There are at least three parties in the accounting bill records, namely the drawer, the drawee and the payee or bearer. The three parties need to be different persons; the same person can be party to the bill in more than one capacity. For example, the drawer can specify that the money must be paid to himself, therefore he is both the drawer and payee simultaneously.
The definition of a bill stated that it could be made out to ‘bearer’, in which case any person in possession of the bill on the due date could claim payment from the drawee. This means that the right to receive payment of a bill can be transferred to another person merely by handing it to him or her. If the word ‘bearer’ is crossed out and replaced by ‘order’ (pertaining to the possible negotiability of the document) it means that the drawee is instructed to pay the amount concerned to the payee, or to any person specified by him in writing, or to any holder subsequently specified. Such written specification must appear on the bill itself (usually on the back) and is know as an endorsement. Therefore, within the accounting process is bill is considered as a negotiable document.
When an enterprise enters into a large number of bill transactions, it is impractical to make a separate journal entry for each accounting transaction. In such cases, a separate journal with the necessary columns is used as a subsidiary journal. Accepted bills are valuable documents and, as in the case of cash, must be controlled properly in an accounting system. They must be safely stored immediately upon receipt. The balance on the bills receivable accounting control account must be compared regularly with the items in the bills book and with the bills on hand.
Bills receivable are current assets and are shown in the accounting balance sheets as such, together with other current assets. They are shown at face value, less any possible provision for doubtful recovery. Bills receivable are often combined with debtors as a single amount, shown as debtors and bills. As in the case of debtors, provision should be made for any bills that could possibly be irrecoverable.
By: Michael Russell