B.3.2 Reconciling a Bank Account

Scenario: As a bookkeeper, your primary responsibility is to ensure that all financial transactions are correctly categorized and match the flow of money into and out of the bank. You have just received the monthly statement from Craig's bank. Now it's time to confirm that all the transactions have been correctly added to and categorized in QuickBooks Online.

17 steps

Akadian

QuickBooks

Start in the Sample company.

To complete this exercise, you must be in the Sample company. From your QBOA account, click on the Gear icon on the top right corner of the screen, then select Sample company.

Note that you will be logged out of your current account. If you are sure, click "Continue" to confirm.

Now let's get started with the exercise.

Click "Accountant Tools", then select "Reconcile"

Note: You only have Accountant Tools because you are an accountant user. If Craig were going to reconcile the books himself, he would go to Transactions > Reconcile.

In the Sample company, you will see the following welcome screen. Click the "Get started" button. *NOTE: In a real life scenario, you will not see this screen unless you are reconciling for the first time.*

In the Sample company, you will see this secondary screen. Click the "Let's get reconciled" button. *NOTE: In a real life scenario, you will not see this screen unless you are reconciling for the first time.*

For the remainder of this exercise, you will need to refer to the [Sample Bank Statement.](https://www.akadian.com/Level%201%20Sample%20Bank%20Statement.pdf)

In the Ending balance field, enter the ending balance found in the [Sample Bank Statement.](https://www.akadian.com/Level%201%20Sample%20Bank%20Statement.pdf) In a real life scenario, you would use the ending date from the Bank Statement. For the purposes of this exercise, enter the *last date of the previous month* as the ending date (for example, if today is in July, use the date 06/30/YY). Click "Start reconciling"

Before moving on to reconciling, let's take a minute to review what you are looking at on this screen: 1\. The **beginning balance** is the ending balance from the last time you reconciled. It cannot be changed. 2\. The **statement ending balance** is from the bank statement, which you entered on the previous screen. 3\. If you discover you have entered the ending balance or the statement date incorrectly, you can click "Edit info" to change it.

4\. Next to each transaction is a circle. This will have a **blue checkmark** if the transaction has already been marked cleared (such as by processing bank feeds). 5\. When a transaction is checked, it is added to the **total payments or deposits**. 6\. The **cleared balance** is the beginning balance minus the payments and deposits. 7\. The **difference** is the statement ending balance minus the cleared balance. **The goal of reconciling is to check off transactions until the difference is zero.** 8\. Note that the transactions currently showing are only those dated on or before the statement ending date. You can **turn off this filter by clicking the X**, and you may need to do so if you have transactions that were added with an incorrect date. This is referred to as a "hidden" or "rogue" transaction.

In the remaining steps of this exercise, we are going to complete the reconciliation by checking each transaction until the difference is zero. If you already have any blue checkmarks, uncheck them individually, or uncheck all at once by clicking the circle at the top of the column. You will need to check them all, and then uncheck them all off. Just follow the prompts.

Using the [Sample Bank Statement,](https://www.fastandeasyqbo.com/SampleBankStatement.pdf) find and check all the matching deposits. *Hint: Click the "Deposits" tab to see only those transactions.*

Next we will find and check all of the Checks.

Click the "Payments" tab, then click "Type" to group all of the checks together

Using the [Sample Bank Statement,](https://www.fastandeasyqbo.com/SampleBankStatement.pdf) find and check the "circle" for each of the cleared checks. Note that one check is missing a check number. We'll cover this in the next step.

One of the checks is missing a check number. We can be relatively certain that this is check #69 because it is for the same amount. If we had access to the bank records, we could view the check image and confirm this, but for the purposes of this exercise, we will assume that it is. Let's edit that transaction and add the check number.

Click on "Tony's transaction line", then type "69" in the Ref No box

Click "Save"

Next we will find and check the remaining debits.

Click "Date" to put the transactions back in the order they started in

Using the [Sample Bank Statement,](https://www.fastandeasyqbo.com/SampleBankStatement.pdf) find and check the remaining debits/payments. Note the following: 1\. There are **two transactions with similar amounts**. Check the one that matches the bank statement. *In a real life scenario, we would need to investigate what happened here. For the purposes of this exercise, we will ignore it.* 2\. There is **one transaction with a different amount than the bank statement**. Except in extremely rare cases, the bank is always correct, so we'll want to correct the transaction in QBO. We'll do that in the next step. 3\. The **difference shows what is remaining unchecked**. Notice that the amount equals the transaction in the bank statement that has yet to be checked.

Finally, we need to correct the amount for one transaction.

Click the "Hicks Hardware" transaction In the Payment (USD) box, type "24.38" (the amount from the bank statement) Finally, click "Save"

Click the "circle" to check the Hicks Hardware transaction you just edited

Note that the difference is now zero (that was our goal!). Click "Finish now"

Congratulations! You have finished reconciling! In a real life scenario, on this pop-up below, you have the opportunity to attach the statement, but since this isn't a feature in the Sample company, it will not show here. *NOTE: There will always be transactions that remain unreconciled because transactions clear the bank at different times than when they are entered in QBO. This is usually not an issue. If you find a transaction has not cleared after a few months, it might be time to investigate.*

Let's see a report of what you just did. Click "View reconciliation report"

This is the Reconciliation Report and it shows, in detail, what you just did. Note: There is an opportunity for you to print this report in a real life scenario. Simply click the printer icon on the top right corner of the report.

Let's say after looking at the report, you realize you need to undo the reconciliation. To do so from this screen, you would want to click on "History by account".

To undo the reconciliation, next to View report (which is the Reconciliation Report from the previous screen), click on the "down arrow" to expand the dropdown and make the selection.

Note: This is not available in the Sample company, which is why you do not see it here.

🎥 Video

Want to follow along? [Click here](https://youtu.be/fc6xcanHN4U) for our video walk-through.

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This exercise comes from our Level 1 ProAdvisor certification course. Do more like it and pass your QuickBooks Level 1 ProAdvisor certification course in one weekend by [clicking here.](https://www.fastandeasyqbo.com/basic)

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