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About this lesson

In this lesson, we cover bank reconciliation: ensuring QuickBooks records match your bank statements (checking, savings, credit card).

Quick reference

Reconciliation

The word reconciliation has come to mean a few different things depending on who you ask. In this case, it means to ensure QuickBooks records match your bank statement. 

When to use

Ideally you'll have QuickBooks set up with bank feeds, your banking data will automatically download into QuickBooks and there will never be duplicates or other hiccups. Ideally. 

Reconciling your bank statement (checking, savings, PayPal, credit card, loan, etc) against QuickBooks will ensure you are not missing any transactions. I recommend doing this monthly when the statement comes.

Instructions

There are a few ways to get here, I'm going to show you one.

  1. In the gray menu on the left, click on accounting and then reconcile
  2. Choose the account you wish to reconcile from the dropdown list
  3. Verify the beginning balance matches the beginning or starting balance on your bank statement
  4. Enter the ending balance as it appears on your bank statement
  5. Enter the statement ending date as it appear on your bank statement
  6. Your transactions may already be checked off but if they are not, click the circle to the right of all the transactions that appear on your bank statement
  7. When you are done, the difference in the upper right hand corner of the screen will read $0.00
  8. When you are finished, click the green button in the upper right hand corner that says finish now 

Hints & tips

  • This process will take about a minute in most cases, you should not skip it. 
  • Even though it's tempting, don't skip months and jump ahead to the most recent month, this will probably only take you about a minute per month.
  • If it doesn't appear on your bank statement, do not check it!
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  • 00:04 In this video, I want to show you how to reconcile your bank account.
  • 00:09 Just a quick introduction of reconciliation.
  • 00:12 Reconciliation means to compare your QuickBooks against your bank statement
  • 00:17 to add anything that's missing.
  • 00:18 Or to fix anything that might have been doubled up or mistakenly entered.
  • 00:23 So ideally, everything should work like a champ and
  • 00:26 reconciliation should take you just a few minutes at the most.
  • 00:29 Once in a while, it takes a little bit longer and you might need to take a little
  • 00:33 walk around the park or have a cup of coffee and then come back to it.
  • 00:37 All right, so let's start reconciling.
  • 00:39 There's a handful of ways to get to your reconciliation screen.
  • 00:43 You can either click on the gear in the upper right hand corner,
  • 00:46 and then come down to reconcile under the TOOLS column.
  • 00:50 Or if you prefer, you can click on accounting on the left hand and
  • 00:54 gray bar and then click on reconcile.
  • 00:56 So I'm going to go to the reconcile screen.
  • 01:00 When I see this screen,
  • 01:02 it gives me a chance to pick which account would I like to reconcile.
  • 01:06 You should reconcile every account you got a statement for every month.
  • 01:11 So in a perfect world, you're actually reconciling every month.
  • 01:15 Sometimes you don't get it done every month,
  • 01:17 then you might have to go into one month and then another month, back to back.
  • 01:22 My best advice to you is to not combine reconciliations, but
  • 01:25 instead to tell QuickBooks you're going to go one month at a time.
  • 01:29 All right, in our example, we're going to reconcile the credit card.
  • 01:33 So let me show you the credit card statements.
  • 01:35 You can see where I'm getting the information from.
  • 01:37 So right now I have a credit card statement from an example bank USA for
  • 01:42 Rachel's racing school.
  • 01:44 The opening balance on the credit card statement is $0 and
  • 01:48 the ending balance is negative 1416.
  • 01:51 So what that means is that for
  • 01:53 any variety of reasons we've overpaid the credit card by $1,400.
  • 01:57 So stuff happens.
  • 01:59 In the upper right hand corner, the statement and name date is January 15th.
  • 02:03 So I'm going to copy my balance.
  • 02:06 So I'm just going to right-click and then copy.
  • 02:09 I'm going to remember January 15th.
  • 02:12 I'm going to come over to my QuickBooks screen.
  • 02:14 What I can see is my beginning balance is $0, that matches my statement.
  • 02:19 My ending balance, that's what I previously copied.
  • 02:21 I'm now going to paste and then my ending date.
  • 02:26 The statement happens to be dated January 15th.
  • 02:29 It's not uncommon for the credit card to be dated somewhere in the middle
  • 02:33 of the month as opposed to being the calendar month.
  • 02:36 So no big deal.
  • 02:37 I'm going to click on Start reconciling.
  • 02:41 So what QuickBooks has done is it's pre checked a bunch of transactions for me.
  • 02:46 What I can see in the upper right hand corner is an exclamation mark and
  • 02:50 a difference and it all feels very strange.
  • 02:53 So let me walk you through what you're seeing here.
  • 02:56 Reconciling is where you take your QuickBooks and you say,
  • 02:58 I'm going to compare you against to the bank statement.
  • 03:01 What you want is for your QuickBooks' cleared balance to equal
  • 03:06 the balance on your bank statement that you've manually keyed in.
  • 03:09 So, I kind of dislike the way that this is organized, but
  • 03:12 I'm going to walk you through what it's telling you.
  • 03:15 The statement ending balance, that's what you manually keyed in.
  • 03:19 By the way, if you keyed in the wrong number and this number here isn't correct,
  • 03:23 you can always fix it by clicking Edit info in the upper right hand corner.
  • 03:29 In QuickBooks the beginning balance since the last time we did this, or
  • 03:32 in this case since the beginning of time, the balance was $0.
  • 03:37 To the $0, I'm go,nna add all my charges.
  • 03:41 So increase my balance by $183.
  • 03:44 I'm going to minus or subtract all my payments, so
  • 03:48 I'm going to decrease my balance by $4,700.
  • 03:53 Once I take the 0 plus the 183 minus the 471,
  • 03:58 I have a cleared balance of 4,500.
  • 04:02 Now the difference over here, this 31 is because my 4,100
  • 04:07 minus my statement balance is a difference of $3,100.
  • 04:11 So what I know is that QuickBooks helpfully pre checked stuff, but
  • 04:15 it it pre checked either the wrong things or too many things or not enough things.
  • 04:21 Something just isn't working.
  • 04:23 So let's look at the transactions down here.
  • 04:26 These transactions are all pre checked because they have a green box.
  • 04:30 The green box means that they were in the bank feeds.
  • 04:34 So if we come over here to banking and then banking again, all the things that
  • 04:38 are here that we clicked add or transfer, if I click to add or transfer, when they
  • 04:43 go into the reconcile screen, they'll have a green box and they'll be pre checked.
  • 04:49 What I want to look at is the things that are checked and
  • 04:52 just figure out, out of these things, what's not on my bank statement,
  • 04:57 I only want to check off things that are in my bank statement.
  • 05:01 So I'm just going to click the Select All button here and uncheck everything.
  • 05:06 We go over to the bank statement.
  • 05:08 So I'm going to look down here, I have a charge of 38,
  • 05:12 a charge of 139 and a charge of 523.
  • 05:15 So I'm going to come back to QuickBooks and I'm going to click 38, 139, 523.
  • 05:20 I can see that I've selected a total of $183 in charges.
  • 05:27 I go back to here, I can see, charges 183.
  • 05:31 And I have payments, so they only show one payment and it's $1,600.
  • 05:37 So go back to QuickBooks and I check off the one payment for $1,600.
  • 05:42 Now my difference is zero.
  • 05:44 This is perfect.
  • 05:45 This is what we want.
  • 05:47 What I do want to point out and what I did specifically when I created this PDF was
  • 05:52 I didn't include all the transactions that would show up in this date range,
  • 05:56 because I wanted you to see what happens in the real world.
  • 05:59 There's going to be stuff such as those payments that don't show up on
  • 06:02 the statement.
  • 06:02 But they're totally and completely valid.
  • 06:05 Sometimes what'll happen is you'll have a charge that is dated exactly the same date
  • 06:10 as the statement, but it doesn't show up on the statement.
  • 06:13 It's okay that it's not checked off.
  • 06:16 Next month when you go to reconcile, you'll see it on the statement and
  • 06:20 you'll check it off.
  • 06:21 If you have something here that just doesn't get checked off and
  • 06:24 a couple months go by, that's when I want you to start investigating.
  • 06:29 Did you enter it by mistake?
  • 06:30 Did it get double entered because of some sort of glitch or fluke?
  • 06:34 So really, you're just looking at this and you're saying,
  • 06:36 okay, all these things match.
  • 06:38 If you're missing anything, you know how to add them by coming up to new and
  • 06:42 either logging an expense or logging a deposit or logging a transfer.
  • 06:47 This process of reconciling is exactly the same whether you're doing it for
  • 06:51 the credit card, for a loan account, for the bank account, for the savings account.
  • 06:55 You get the idea.
  • 06:57 In the upper right hand corner, I'm going to click on Finish now.
  • 07:01 It says congratulations, you've reconciled.
  • 07:05 Now when I go to reconcile the next time,
  • 07:08 some information pre fills that wasn't here before.
  • 07:12 And it says the last time you reconciled, your statement was 115.
  • 07:16 We're recording this video after January 15th.
  • 07:20 So theoretically I would then go on and reconcile February, and March, and
  • 07:24 so forth until I got current.
  • 07:27 So in the beginning of the video when I told you not to skip,
  • 07:30 this is what I meant.
  • 07:31 If you're behind on your reconciliations, get all your statements,
  • 07:35 download them as a PDF, get a nice big cup of coffee,
  • 07:38 and go one month at a time with your reconciliation.

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