The Happy Accountant

Online banking is now normal for many individuals and businesses.  It is great for keeping right up to date with your bank transactions.  It’s also a great way to save money:  many banks will charge business customers for processing cheques (either drawn by the business or paid in), however some banks will not charge for [...]

Balance per cash book
less any bank payments
plus any bank receipts
Corrected cashbook:
less any cheques paid in but not cleared
plus any cheques drawn (paid out) but not cleared
Balance per bank statement:
Note that this is only one way of laying out a bank statement.  With the advent of accounting software, a written bank reconciliation such as this is [...]

The company’s cash book may require the following adjustments:

direct debit payments and standing orders directly to or from the bank account may not have been entered into the cash book
bank interest and charges may not have been entered into the cash book.

Items which may have been included in the cash book but which may not [...]

The point of carrying out a bank reconciliation is to check that nothing has been missed from the business’s records and also to ensure that there have been no bank errors.
A business’s cash book will rarely agree to the bank statement and it can be easy to miss transactions, such as direct debit payments if a [...]

A bank reconciliation is simply a checking exercise to ensure that the business can “agree” their records to the balance on their bank statement.
It is normally done each time a bank statement is received.  (It is possible, but highly inadvisable to leave it until the year end)