Reconciling your Accounts

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Reconciling your Accounts

When you receive a bank statement or credit card statement, you will want to reconcile it to the transaction entries you have made in that account in ACCOUNTS. The program actually lets you reconcile any Asset or Liability account, though most likely you will only do this for bank accounts and credit card accounts.

 

To do that, from the main window click on the account and then click the Reconcile button. Alternatively, from that account's register window press Ctrl+R (i.e. hold down Ctrl and press R), or right-click on any transaction field and pick Reconcile Account from the popup menu.

 

You will then see a window such as the following:

 

ReconcileWindow1

 

The suggested Statement Ending Date will be the last day of the previous month, but you can change it as appropriate, to match the actual ending date of your statements. If you do change it, as soon as you Tab or click out of the field, the displayed Beginning Balance will change accordingly.

 

The displayed Beginning Balance is not editable. It is calculated from your transactions on that account, and is the total of all reconciled transactions, which were reconciled for Statement Ending Dates earlier than your currently entered Statement Ending Date. This may or may not be the same as the starting balance on your bank or credit card statement, depending on whether you have done previous reconciliations, whether they were completed successfully, etc.

 

When you are doing your first-ever reconciliation on an account, the displayed Beginning Balance will always be $0. Even if you have entered an Opening Balances transaction, which specified the opening balance for that account, it will not show up as part of the Beginning Balance on this window, because that is a transaction that has not yet been reconciled! Instead, when you get to the next window (Reconciliation Details, described below) that Opening Balances amount will show up as one of the transactions on the account, that has to be reconciled.

 

The Ending Balance should be read off of your statement and entered. Note: If you have previously done a reconciliation on this account for the same Statement Ending Date, and saved your work on it with the Finish button on the next window, your previous Ending Balance will be automatically recalled for you.

 

If this is for a bank account (or any Asset account), the fields in the window above under the heading "Unrecorded transactions from your statement" will be shown. That allows you to have the program automatically enter a transaction amount for either or both of a Service Charge and Interest Earned, and specify which account they are to be charged against. If you have done this before on this bank account, the previously-used Service Charge and Interest Earned accounts will be displayed automatically for you (though you can still change them if necessary).

 

For a credit card account (or any Liability account) there is only one row for an unrecorded transaction, for a Finance Charge.

 

The Account fields for unrecorded transactions drop their lists down automatically, as soon as you Tab or click into them. They are initially displayed in chart of accounts order, but if you press a letter, they immediately go to the first account that starts with that letter, and also re-sort the list in alphabetical order, to make it easier to see and select other accounts that start with that letter. If you press Backspace after that, or Tab out of the field, the list is returned to chart of accounts order.

 

Only enter data for unrecorded transactions in the bottom half of this window if in fact you have not previously entered them in your register. Otherwise, you will end up with two copies of the transaction! (The same applies if you work through the reconciliation process twice, saving your partially-reconciled work after the first time - don't re-enter those transactions the second time.)

 

The Delete Latest button on this window is only enabled (usable) if you have previously done at least one reconciliation on this account. It prompts you as to whether you wish to delete the latest reconciliation done on the account, and you have to answer two such prompts before it will do so. This would normally only be appropriate if you realized that there was something completely wrong with that last reconciliation, such as having done it for the wrong date. If you do this, it removes the record of that reconciliation, but the transactions will still be there!

 

Click Reconcile on this window to continue the reconciliation process on the next window, or Cancel to cancel your reconciliation, or Help to view this help page.

 

Second Window

 

If you click Reconcile above, a window such as the following will appear:

 

ReconcileWindow2

 

You can resize this window (primarily to make it taller or shorter, because the main areas for displaying your transactions can't be made any narrower, and won't get any wider) by clicking on an edge or corner of the window and dragging. The example above has been resized to be fairly short. (In addition, the image was zoomed down a bit to better fit into this help page.)

 

Some of the headings will vary depending on whether you are reconciling a bank (or any Asset) account, or a credit card (or any liability) account. Generally though, each side will display one type of transaction, either Cheques and Payments versus Deposits, or Charges and Cash Advances versus Payments and Credits. (For accountants: the left side is always the Credits on the account; the right side is always the Debits.)

 

If you entered any unrecorded transactions in the first window, they will appear in this window, with a green checkmark indicating they are already assumed to be reconciled.(In the example above, the Service Charge and Interest Earned transactions were entered in that way.)

 

The "Show unreconciled transactions after the Ending Statement Date" checkbox controls whether or not such transactions are shown. Normally it would make the most sense to leave this unchecked, but you might need to check it if you are having trouble balancing the reconciliation, and you suspect that you may have entered a transaction that is listed on your statement with a date that is after the statement ending date you entered. If you check this checkbox, then check off some of the transactions after the ending statement date as being reconciled, then uncheck this checkbox, those transactions you checked off will not disappear, because you clearly want to include them in the reconciliation!

 

There are a few approaches you can take to checking off the transactions that appear on your bank or credit card statement, to show that they have been reconciled.

 

If almost everything on this window is on the statement, you can use the Mark All button to check off all of the displayed transactions. (After using that button, it changes to Unmark All, in case you want to undo that.)

 

You can click your mouse on transactions to check or uncheck them. You can also press the space bar or the Enter key to check or uncheck the currently highlighted transaction, and move down to the next row. (The Tab key moves from the left side to the right side.)

 

As you check off transactions as reconciled, they add to the Cleared Balance displayed at the bottom right (or subtract from it, as appropriate). The Statement Balance displayed there is just what you entered as the Ending Balance on the first reconciliation window. The Difference is the Cleared Balance minus the Statement Balance. Your goal is to get that Difference to zero!

 

Finishing the Reconciliation

 

When you have got the Difference to zero, click Finish to save your work. Reconciled transactions will show up on your register windows with an "R" in the Clr column.

 

If you cannot get the Difference to zero, you need to figure out what the problem is. Here are some possibilities:

 

There is a displayed transaction that is on your statement that you have not checked off. (Check it off.)

There is a displayed transaction that you have checked off, that is not on your statement. (Uncheck it.)

There is a transaction that is displayed and on your statement, but the amounts differ.

There is a transaction that is on your statement but not displayed.

 

For the 3rd and 4th cases above, you cannot fix them in this window. However, click Finish anyways. The program will warn you that the Difference is not zero, but give you an option to save your work anyways. Do so. Then go back into the register window, and make the appropriate fixes (fix incorrect amounts, or add missing transactions). Then you can come back into this same reconciliation again. Be sure you enter the same Statement Ending Date and Ending Balance. (If they don't come up correct at first, correct the Statement Ending Date, then Tab or click out of the field, to have the correct Beginning Balance and previously-entered Ending Balance come up.) You should then be able to complete the reconciliation properly, with a Difference of zero. (If you added in Service Charge, Interest Earned, or Finance Charge transactions on the first reconciliation window the first time, do not enter them in again - they have already been saved!)

 

If you do enter the reconciliation window a second time, having clicked Finish and allowed it to save the first time, then made corrections, all previously-reconciled transactions will still show as checked off. So all you have to do is make any final checkmarks (for example for missing transactions that you added) and you should be able to Finish with a difference of zero.

 

After your work is saved when you click Finish, you will be prompted for whether or not to display the Reconciliation Details report. If you answer Yes, it will be displayed, and you can print it. If you answer No, you can come back to this report at any time, through the Reports Banking Prior Reconciliation menu option.

 

If you click Cancel on this window, all of your reconciliation work will be eliminated, including any unrecorded transactions you entered on the first reconciliation window. (It asks you to confirm before abandoning this work!)

 

And as always, clicking Help on this window displays this help page.

 

Notes on Reconciled Transactions in your Register

 

If you are in the register window, on a transaction that has been reconciled, it will warn you if you try to delete it, because that would throw off the reconciliation. The same applies if you try to change the amount of a reconciled transaction.

 

If a transaction affects more than one asset or liability account that can be reconciled (for instance, a transfer between bank accounts, or paying off your credit card bill with a cheque from your bank account), each side (split line) of that transaction needs to be reconciled separately, in its own account.