Reconciliations

Overview

Reconciliation of accounts refers to the process of ensuring that two sets of records for the same account are in agreement. It is a standard accounting procedure to reconcile your accounts to ensure there is no discrepancy between your bank registers in the accounting system and actual bank statements. This is done by making sure the balances match at the end of a particular accounting period. To ensure the reliability of the financial records, reconciliations must be performed for all balance sheet accounts (like gas, credit card, bank accounts, etc.) on a regular and ongoing basis. The general rule is that any account that is being maintained separately needs to be reconciled periodically to ensure correct balances across the two systems.

For instance, you get a monthly statement from the bank showing what transactions cleared since the last period. You can view those transactions in Core and check them off one by one so that the closing balance on the statement matches the closing balance in Core. Some accounts are susceptible to things like service charges, interest earned or finance charges. As these are not directly tied to a single transaction, they are entered as General Journal entries. The same happens when the closing balance you are trying to reconcile does not match with the records in the system. You can either find and fix the issue, or you can perform an auto-adjustment to make a General Journal entry for the discrepancy amount.

Performing reconciliation in Core is straightforward because most of the data is already in the registers. You can quickly enter or download information from your bank statement (say, ending balance, charges and interest), clear your checks and deposits, and print a report when you have successfully reconciled. Click to watch this video on reconciling accounts in Core.

Note: You can get a visual overview of this feature in Core from the General Accounting flowchart.

Typically, accountants are the ones who reconcile the accounts. Core takes into account the transactional changes taking place in the company database during the reconciliation process. So, to avoid any discrepancy in reconciliation, it alerts you about the changes and prompts you to refresh. Please note that you cannot reconcile the system accounts (with account numbers 12000, 12010, 3900 and 2200) and tax accounts (with account numbers 25100, 25200, 25300 and 25400). The only exception to this are the two system-defined accounts (3000- Opening Balance Equity and 2100- Payroll Liabilities), which are available for reconciliation.

Field Descriptions

Basic Tasks

Reconcile Accounts

View Reports

Advanced Tasks

Manage Reconciliations

Create Business Activity Statements

Mark Screen as Favorite

 

Field Descriptions

Field Name Field Description

Reconcile Accounts >

Statement Date To reconcile your Core account with a corresponding statement, you must select the statement's end date.
Beginning Balance Check this balance in Core against the starting or opening balance on the statement. The first time you reconcile, the beginning balance is zero. Typically,   Beginning Balance + Deposits - Payments and Withdrawals = Statement Balance
Statement Balance This is the ending balance of the statement being reconciled, say of a bank or credit card statement. Statement balance resets to zero (0) if we cancel the reconciliation. Typically,   Beginning Balance + Deposits - Payments and Withdrawals = Statement Balance
Service Charge While reconciling your bank accounts, you must provide details about any expenses incurred. Your bank statement lists bank service charges such as standard monthly charges. If you specify service charges during the reconciliation process, Core creates a check transaction for this and no general journal entry.   When reconciling trust fund accounts, Core ignores this charge, even if you enter some amount here.
Date Date on which the service charges were assessed.
Account Account used to post service charges, if any. You should create an expense account for this, if not already done.
Interest Charge While reconciling your bank accounts, you must provide details about any income earned. Your bank statement lists the amount of interest earned on your account. If you select an account other than income or expense here, it creates a transfer or deposit entry in the Deposits section of Reconciliations. If you specify interest charges during the reconciliation process, Core deposits that into the bank account and generates a deposit entry for it.   When reconciling trust fund accounts, Core ignores this charge, even if you enter some amount here.
Date Date on which the interest was calculated.
Account Account used to post service charges and interest earnings, if any. You should create an expense and income account for this, if not already done.
Finance Charge While reconciling your accounts such as credit card or equity, you must provide details about any finance charges. This charge is specified on your credit card statement.
Date Date on which the finance charges were assessed.
Account Account used to post finance charges, if any. You should create an expense account for this, if not already done.
Reconciliations >
Account

Select the account whose transactions you want to reconcile. It can be any equity, bank, credit card, asset or liability account.

Cleared Balance

Displays the running balance from all your cleared transactions. The Cleared Balance is zero when you begin a reconciliation session for the first time. For subsequent reconciliations, it displays the total from previously cleared transactions. Typically, it is the same as the Beginning Balance and is different only if there are any charges associated with the reconciliation.

For bank accounts, the calculations are:

Cleared Balance = Beginning Balance + Interest Charge - Service Charge + Deposits Cleared in the session - Payments Cleared in the session

For credit cards, the calculations are:

Cleared Balance = Beginning Balance + Finance Charge + Payments Cleared in the session

Difference Balance

Initially, Difference Balance = Statement Balance - Beginning Balance

However, when you start reconciling transactions,

Difference Balance = Statement Balance - Cleared Balance

If the difference is $0, everything is accurate and you are ready to reconcile the accounts now. If the difference is not $0, you have to figure out the inaccuracy and correct it. In that case, you can choose to reconcile later.

Period

Allows you to control the date range of entries that appear on the grid for reconciliation. It defaults to the As Of statement date, but can be changed. All the entries as well as the summary values at the top of the grid follow the selected period.

Reference No. This can be the bill number or check number of the transaction.   Core sets the Check No./Ref No. for checks that are created against the bank service charges during account reconciliation as SERV_CHG. Such checks are treated as 'Printed' so that they do not show up in the Print Checks screen.
Checks/Payments This list displays all the checks written and electronic payments made since your last reconciliation. It also includes checks that haven't yet been cleared by the bank since the last bank statement. You must select the check box for each transaction that has a matching transaction on the statement (make sure the amounts match). This grid is available for accounts such as checking and savings bank account
Deposits/Credits This list displays all the deposits and other credits received since your last reconciliation. You must select the check box for each transaction that has a matching transaction on the statement (make sure the amounts match). This grid is available for accounts such as checking and savings bank account.

 

Reconcile Accounts

All the transactions that are on your bank statement are cleared transactions, meaning that missing transactions have not yet cleared. You can add any transactions you forgot by opening that account register and entering them there. When you return to the Reconciliations screen, the new transactions are automatically added and you can clear them here. Typically, the Cleared Balance is zero when you begin a reconciliation session for the first time. Core automatically saves your data during the reconciliation process. If any changes are being made that affect the reconciliation process, Core refreshes the screen and reloads the data, preserving any sorting done by you.

The goal of an account reconciliation is to make the Cleared Balance equal to the Statement Balance or as close as possible to it. If they remain different and you save the reconciliation, Core prompts you to adjust the difference with a journal entry.

Note: Items that are automatically reconciled by bank feeds are already flagged as cleared.

To reconcile accounts, watch this video or follow these steps:

    1. Open the Reconciliations screen from the side menu > Accounting > Reconciliations.

    1. Select an account, say bank account, from the Account drop-down that you want to reconcile.

    2. Click Reconcile on the top-right. It displays Resume instead of Reconcile if the selected account has draft reconciliations associated with it.

    3. On the Reconcile Accounts dialog, enter the required information:

      • Statement Date: To reconcile your Core account with a corresponding statement, you must select the statement's end date.

      • Statement Balance: This is the ending balance of the statement being reconciled, say of a bank or credit card statement. Statement balance resets to zero (0) if we cancel the reconciliation. Typically,
        Beginning Balance + Deposits - Payments and Withdrawals = Statement Balance

      • Service Charge (While reconciling your bank accounts, you must provide details about any expenses incurred. Your bank statement lists bank service charges such as standard monthly charges. If you specify service charges during the reconciliation process, Core creates a check transaction for this and no general journal entry.
        When reconciling trust fund accounts, Core ignores this charge, even if you enter some amount here.), Date and Account

      • Interest Charge (While reconciling your bank accounts, you must provide details about any income earned. Your bank statement lists the amount of interest earned on your account. If you select an account other than income or expense here, it creates a transfer or deposit entry in the Deposits section of Reconciliations. If you specify interest charges during the reconciliation process, Core deposits that into the bank account and generates a deposit entry for it.
        When reconciling trust fund accounts, Core ignores this charge, even if you enter some amount here.), Date and Account

    1. Click Continue.

    2. On the Reconciliations screen, you can sort the columns by date or amount to save time in searching for records for reconciliation. You can also select the relevant date range from the Period drop-down. (Allows you to control the date range of entries that appear on the grid for reconciliation. It defaults to the As Of statement date, but can be changed. All the entries as well as the summary values at the top of the grid follow the selected period.)

    1. Typically, the Cleared Balance is zero when you begin a reconciliation session for the first time. You can view the cleared transactions in Core and check them off one by one by checking their Clear box against Checks/Payments so that the closing balance (cleared balance) in Core is the same as the statement balance. Select the deposits or credits to clear, if any. (Displays the running balance from all your cleared transactions. The Cleared Balance is zero when you begin a reconciliation session for the first time. For subsequent reconciliations, it displays the total from previously cleared transactions. Typically, it is the same as the Beginning Balance and is different only if there are any charges associated with the reconciliation.

      For bank accounts, the calculations are:
      Cleared Balance = Beginning Balance + Interest Charge - Service Charge + Deposits Cleared in the session - Payments Cleared in the session

      For credit cards, the calculations are:
      Cleared Balance = Beginning Balance + Finance Charge + Payments Cleared in the session) 

    1. Next, click Save Reconciliation > Final. If the Difference Balance is $0, your accounts are reconciled!

      Note: Core auto saves your reconciliation details as a draft or you can save them manually using Save Reconciliation > Draft. You can click Undo All to clear and reset all the changes made in this session, including the statement details. You can also click Continue Later to cancel the process and resume it later.  

    2. However, if there is a discrepancy between the transactions in Core and your statement balance, then Core prompts you to choose one of the options:

      • Auto Adjust: You can fix the issue by selecting Auto Adjust to force Core to create a journal entry for the difference. The G/L entry created for the difference either debits or credits the Reconciliation Discrepancies - 66900 system account.

        You can set the Adjustment Date for that entry.

      • Cancel: You can use this option to return to the screen without making any adjustment. You can then fix the issue manually by opening that account register and entering the transaction there. When you return to Reconciliations, the new transaction is automatically added and you can clear it here.

Note: If needed, you can click Modify Details anytime to go back to the Reconcile Accounts dialog and make changes there.

 

View Reports

To view a report:

    1. Open the Reconciliations screen from the side menu > Accounting > Reconciliations.


    2. In the list view, click More > View Reports.

    3. Select a report from the Report List dialog. It opens in the viewer.

    4. Preview the report and then choose to export or print it.

 

Manage Reconciliations

To view the reconciliation history of an account:

    1. Open the Reconciliations screen from the side menu > Accounting > Reconciliations.

    1. Select an account from the Account drop-down whose history you want to view. You can see all the previous reconciliations of the selected account. Draft reconciliations are not displayed here.

Note: When the selected account has a draft reconciliation, Core prompts you to continue reconciling that account first.

    1. You can click  to select Detailed, Summarized or Discrepancy reconciliation reports to run.

    2. If needed, you can undo the last reconciliation by clicking Actions > Undo. Undoing a reconciliation affects your account's beginning balance and also removes the cleared status of all the transactions and charges.

    3. You can also click Reconcile on the top-right if you decide to reconcile the accounts. It displays Resume instead of Reconcile if the selected account has draft reconciliations associated with it.

Create Business Activity Statements

Australian business owners need the ability to run a Business Activity Statement (BAS) to report their taxes to the Australian Tax Office. The Business Activity Statements screen in Core allows you to create and review a draft BAS report where values are pulled automatically by Core, but you can enter any payroll numbers that are not tracked by it. You can also review your previously completed BAS reports and export them as PDF, Excel or CSV.

To create BAS:

    1. Open the Reconciliations screen from the side menu > Accounting > Reconciliations.

      reconciliations_BAS.png
    2. In the list view, click More > Prepare Activity Statement (BAS).

    3. On the Business Activity Statements screen, click Create New on the top-right. Check Business Activity Statements for details.

    4. Choose the Save option: Save as Final or Save as Draft.

Mark Screen as Favorite

You can mark or flag the most-often used and important screens in Core as your favorites up to a maximum of ten. These favorite screens then display separately on the side menu under the Favorites list. You can manage all your favorite screens in Core from User Preferences.

To mark this screen as your favorite, watch this video or follow these steps:

    1. Open the Reconciliations screen from the side menu > Accounting > Reconciliations.

    1. In the list view, click  on the top-right.

    2. You can access this screen from the side menu under Favorites.

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