Q10: View this video on bank reconciliations using Xero. How do we complete bank reconciliations using a cloud-based accounting system such as Xero?
With direct bank feeds to cloud-based accounting systems, bank reconciliations can easily be done each day. Each day, a firm can check whether the transactions in a firm’s bank account for a period have all been recorded accurately in the firm’s Cash receipts and Cash payments journals. Where there are differences, a firm will need to enter adjusting journal entries, for example for items such as bank fees or dishonoured automatic payments. It is most unusual for the bank to make errors in a firm’s bank account, but they are possible. If an error is detected in a firm’s bank account then the firm needs to arrange with its bank to correct the error.