Question

Ask two friends or relatives whether they reconcile their bank statement every month and why or why not.  Post their responses (NO NAMES of who you interviewed) along with your thoughts/opinions on this practice. In addition, assuming you were their financial manager, include what you would recommend they do in the future.

PLEASE ANSWER WITH 10 SENTENCES. WILL GIVE YOU THUMBS UP! :D

Answer 1

Bank reconcilation - It is a process of cross checking the balance as per our records of bank transactions with the bank statement maintain by bank.The aim of this reconcilation is to have a regular check on errors,mistakes or ommisions that results in difference in both the books.

I have a talk with my friends according to them they both maintain bank reconcilation statements every month due to the following reasons-

1. To know the deductions done on behalf of the bank example- Bank charges,Interest or any subscription plan.

2. To detect the errors occuring which leads to difference in both books balance such as omission,transposed numbers,misread reciepts and taking suitable actions.

3.To avoid surprises- every month reconcilation helps in detecting any error on regular basis

4.Helps in identifying subscriptions that is meant to cancel to avoid wastage of money.

5. To find correct image of cash outflow and inflow,so that the future investments can be planned.

According to my point of view this practice is little time consuming but will be beneficial for future as it detects all the fraud and errors at a primary stage and helps in taking necessary actions.By doing this practice every month one can attain accuracy of their balance.

As a financial manager i would like to recommend using latest software for doing such reconcilation as sometimes manual error can occur,reporting me the doubts they are finding in the financial statement,discussion on the bank deductions and finding reasons for that,recording the transactions by matching with the recipts and other valid vouchers.consulting without taking any bank scheme or subscription.submitting every month financial reports so that financial decisions can be taken.

I hope this will help you!!!