Reconciling an account often means proving or documenting that an account balance is correct. For example, we reconcile the balance in the general ledger account Cash in Checking to the balance shown on the bank statement. The objective is to report the correct amount in the general ledger account Cash in Checking. You will often need to adjust the general ledger account balance for items appearing on the bank statement that were not entered in the general ledger account.
I recall being asked to reconcile the general ledger account Freight Payable. What I needed to do was provide documentation that the balance in Freight Payable was proper. I proceeded to look at the shipments of recent sales and then determined how much we would be obligated to pay for the freight on those sales. We then adjusted the balance in Freight Payable to my documented amount. This reconciliation was done to have the correct account balance and to provide the outside auditors with documentation which could easily be reviewed.
I also reconciled the balance in Utilities Payable by computing the daily cost of each utility that the company used. The cost per day was then multiplied by the number of days since the last meter reading date shown on the utility bills already entered in our accounting system. We then adjusted the Utilities Payable account balance to be equal to the documented amount.
The segregation of duties is associated with the safeguarding of an organization's assets and the topic known as internal control.
An example of the segregation of duties would be a company's requirement that the bank statement for its checking account must be reconciled by someone other than a person writing checks and someone other than a person recording amounts in the company's general ledger.
Another example of the segregation of duties is that the person handling cash cannot be the same person that records cash amounts in the company's ledgers.
By segregating or separating the duties, it becomes harder for dishonest actions to go undetected.
You balance a checkbook by comparing the amounts on your bank statement or in your bank account to the amounts you have in your checkbook or check register. Accountants refer to this as reconciling the bank statement or doing a bank reconciliation or bank rec (pronounced as "wreck").
The terms bank balance and book balance are used in the accounting and bookkeepingprocedure known as reconciling the bank statement.
The bank balance is also known as the balance per bank or balance per bank statementand it refers to the ending balance appearing on a bank statement. For example, when a company receives its June checking account statement from its bank, the June 30 balance will be the bank balance. Usually this bank balance will not agree with the amount in the company's records since some checks written by the company will not have cleared the checking account by June 30. Similarly, some money received by the company on June 30 may not have been deposited in time for the amount to appear on the June bank statement.
In the bank reconciliation the term book balance may be referred to as the balance per books, and it is the amount shown in the company's records. For example, the book balance at June 30 refers to the balance in the company's general ledger account Cash or Checking Account. (For an individual, the book balance is often the balance appearing in the person's check register.) Often the book balance at June 30 will not be the true amount until some items on the bank statement are recorded. For example, the June bank statement may reveal some bank fees that were withdrawn by the bank at the end of June.
I believe that a retailer's delivery surcharges are a price adjustment and should be reported as operating revenues. The surcharges are operating revenues that will be matched with the higher operating expenses such as gasoline. The delivery surcharges should not be reported as nonoperating revenues or other income. Nonoperating revenues or other income items would be outside the main activities of the retailer and would include items such as interest earned or the gain on the sale of a plant asset.
The retailer can record the delivery surcharges in a separate operating revenue account. In other words the sales revenues account could be used to record the revenuesexcluding the surcharges and then another sales revenue account could be designated as the delivery surcharge revenues account. Those two accounts would then be added together to report total operating revenues.
Interest expense is a nonoperating expense when it is not part of a company's main operations. For example, a retailer's main operations are the purchasing and sale of merchandise, and a manufacturer's main operations are the production and sale of goods. Neither the retailer nor the manufacturer has as its main operations the borrowing and lending of money. (On the other hand, a bank's main operations involves interest expense on its depositors' savings accounts and interest revenues on its loans and bond investments.)
By reporting interest expense as a nonoperating expense, it also allows for a better comparison between the operating income of a retailer that has little debt with a retailer that has a significant amount of debt.
A voided check is a check written or partially written but then canceled or deleted by the maker of the check.
The notation of "void" is used because checks are prenumbered for control purposes and every check needs to be accounted for.
Voided checks may require some adjustments when reconciling the bank statement. For example, if a check is written in December but is voided in January, the Cash account in the company's general ledger will need to be increased when the check is voided. (Another account will need to be credited because of double entry bookkeeping.)