Reconciling a bank account

The statement-to-book tie-out: pick the account, enter the statement's ending balance, tick what cleared, drive the difference to zero, and lock the period.

How-toFor Bookkeepers, Business owners, Firm staff

What reconciliation proves

Reconciliation proves that what your books say about cash agrees with what the bank says, after accounting for timing. It is the single most valuable control in small-business accounting, because almost every kind of error — missing transactions, duplicates, wrong amounts, unauthorized activity — eventually shows up as a reconciliation that will not balance.

Before you start

Have the statement in front of you — the actual PDF from the bank, not the feed's version of it.
Import or sync activity through the statement's ending date.
Categorize the feed. Uncategorized transactions are not in the ledger and cannot clear.
Confirm the prior reconciliation's ending balance matches this statement's beginning balance.

Working the reconciliation

1
Open Bank Reconciliation and choose the account.
2
Enter the statement date and the statement ending balance.
Copy these from the statement exactly. Load prior statement fills in the beginning figures from your last reconciliation.
3
Tick the lines that appear on the statement.
Work down the statement, not down the screen. Ticking from the statement finds transactions missing from your books; ticking from the screen does not.
4
Watch the difference.
The cleared balance updates as you tick. The difference must reach $0.00 before the statement can be locked.
5
Investigate anything on the statement you cannot find in Books.
Add it — it is real activity that has not been recorded. This is the whole point of the exercise.
6
Leave genuinely outstanding items unticked.
Checks written but not yet presented, and deposits in transit, are correctly in your books and correctly absent from the statement. They carry forward.
7
Lock the statement.
Locking freezes the cleared lines. Its ending balance becomes the next period's beginning balance.

Books — Bank Reconciliation

Statement tie-out · Northwind Trading

Bank Reconciliation

4 accounts

Bank account

Operating — Chase 4471

Statement date

2026-07-31

Statement ending balance

$284,119.42

Date	Memo	Amount	Category account	Cleared
Jul 29	ACH Rothman Supply	(2,410.00)	2000 · Accounts payable	✓
Jul 30	Deposit — lockbox	18,900.00	1200 · Accounts receivable	✓
Jul 31	Check 2841 — Beacon Legal	(3,750.00)	6810 · Professional fees	—
Jul 31	Service charge	(42.00)	6910 · Bank fees	✓

Tie-out

Cleared balance $284,119.42

Statement ending $284,119.42

Difference $0.00 — drive the difference to $0.00 to lock

Load prior statementLock statement

The difference (4) is the whole game. Drive it to $0.00 and the statement can be locked.

1Account and statement date
2Statement ending balance
3Bank lines — tick what cleared
4Difference — must reach $0.00

Illustration of the screen layout

Outstanding items

Unticked transactions are outstanding: recorded in your books, not yet on the statement. That is normal and expected. What is not normal is an outstanding item that stays outstanding.

Age	What it usually means
Under 30 days	Ordinary timing. Nothing to do.
30–90 days	Worth a look. A check that has not been presented in two months may have been lost.
Over 90 days	Investigate. Void and reissue a stale check, or write it off if the obligation is genuinely gone.
Over a year	Almost certainly an error rather than a real outstanding item — often a duplicate or a transaction entered against the wrong account.

Common questions

Can I reconcile a credit card?

Yes, and you should — same process. The statement ending balance is the amount owed. Watch the sign convention: on a card, charges increase the balance owed and payments reduce it.

What if I find a transaction on the statement that is not in Books?

Add it. That is the reconciliation doing its job. Code it properly rather than plugging it to a miscellaneous account — an unexplained bank debit is worth understanding before it is buried.

Can I unlock a locked statement?

Yes, but treat it as an exception rather than a routine step. Unlocking invalidates every reconciliation after it, so you will need to work forward again. If you only need to correct coding, recategorize instead — that does not disturb the cash tie-out.

How often should I reconcile?

Monthly, on every account, as part of close. Accounts with high volume or fraud exposure benefit from a weekly pass. An account nobody reconciles is an account nobody would notice being drained.