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QuickBooks - Account Reconciliations

The reconciliation feature in QuickBooks is a very powerful tool, but my experience has been that the majority of users aren't utilizing its features effectively. In addition, the most common usage of this feature is to reconcile bank statements, but it can also be used to reconcile other accounts as well.

Starting a reconciliation is relatively easy, but the reconciliation window that appears after you click on Continue has some features that may not be all that obvious. The first feature is the fact that every column in the reconciliation window can be sorted simply by clicking once on the column heading. If you want the sort in reverse order, click on the column heading a second time. This is especially useful if the bank statement lists cleared checks separately from all other transactions. Click on the Ref# column so the transactions are listed by number and reconcile those. Then click on the Date column so that the entries match the rest of the transactions listed on the bank statement.

Clicking on the Amount column is useful when looking for a specific amount when the Difference is not zero. I often click on the Payee column when I want to verify that I didn't enter a transaction on the books twice. And you can click on the Check mark column at any time to make all of the unreconciled transactions move to the top of the list.

The second feature that is underutilized is the fact that besides bank statements and credit card statements, almost any account on the Balance Sheet can be reconciled using this feature. (The exceptions are the automatic accounts created by QuickBooks, such as Accounts Receivable, Undeposited Funds, Accounts Payable, and Equity.) For instance, I use the feature to reconcile Petty Cash funds regularly. Another account that I reconcile is Loans Payable. When I receive a statement from the bank for the outstanding balance on a loan, I reconcile the Liability account in QuickBooks against the outstanding balance. Inevitably, there will be a difference, and that amount is the interest that has been added by the bank, so then I know what General Ledger entry to make to bring the books up-to-date.

One other set of accounts that I use the reconciliation feature with are fixed assets and accumulated depreciation. If your accountant uses TurboTax, or any other tax preparation software, fixed asset amounts are entered without anything after the decimal, and depreciation is calculated to whole numbers. I always reconcile QuickBooks against the tax return, so that I could enter the pennies necessary to keep the books balanced and in agreement with the annual corporate tax return.

So don't overlook the special features of the reconciliation feature, and use it to reconcile your Balance Sheet accounts if necessary. Thus your books will be more accurate and your accountant will be happy.

$35p/h

Robert D.

Retired Bookkeeper (Specializing in QuickBooks) & Tax Preparer

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