 Zero Accounting Software 2023 Bank Reconciliation with Bank Feeds After the First Month of Bank Reconciliations. Get ready to become an Accountant Hero with Zero 2023. First, a word from our sponsor. Well, actually these are just items that we picked from the YouTube Shopping Affiliate Program, but that's actually good for you because these aren't things that were just given to us from some large corporation which we don't even use in exchange for us selling them to you. These are things that we actually researched, purchased and used ourselves. Acer 27 inch monitor. I've been using an Acer monitor as my primary monitor for a few years now. This is the first Acer monitor that I have used after having used a series of different brands of monitors in the past. The Acer monitor has been performing well and I'm trusting the Acer brand more and more as I use the monitor. I have a 27 inch monitor which I think is ideal for what I do, which is of course the screen recording and the editing. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com where we have many different courses. You can purchase one at a time or have a subscription model giving you access to all the courses. Courses which are well organized have other resources like Excel files and PDF files to download and no commercials. Here we are in our Custom Zero homepage. Going into the company file, we set up in a prior presentation the bank feed file. Duplicating some tabs to put reports in like we do every time, right-clicking the tab up top so we can duplicate it and then we'll right-click that duplicated tab and duplicate it again. Back to the tab to the middle, accounting drop-down. We want to open up the balance sheet and then we'll tab to the right accounting drop-down. We want to open the income statement. We're going to change the range, selecting the drop-down. We'll bring it back to 2022, the beginning of 2022 and the end December of 2022. On the range, I'm going to update that. Let's tab back to the balance sheet and this time I would like to do a side-by-side so I have two months. We're going to be reconciling as of the end of September and I would also like August next to it. I'll select the drop-down first and let's bring this back to, let's say, September and the 30th. Updating that and then I'm going to go to the super cool edit layout tab that Zero has down below. We're going to be adding a column. It's going to be a date type column and so let's select the date and notice here it says end of the quarter. It's a little bit sneaky because I really just want the end of the month and then I want the prior month, so August here. Now we've got August and September and we can update that and check it out. There's our two here. Now let's also open up our bank reconciliation reports. I'm going to tab to the right to do that. I'm going to right-click and duplicate this tab and let's go into the accounting drop-down and go into our reports. We're going to type in bank reconciliation bank rec and we want, let's first take a look at the prior bank reconciliation we did. Selecting the drop-down that is for August 31st. We'll select it going from the beginning of August to the end of August 31st. I'm going to say OK and then the bank account, we're looking at checking account and then the bank balance from August ended at $20,719.96. So was that 20 or 27? $20,719. $20,719.96? $96.96. OK, let's update that and so there we have it. This is 2023. Let's bring it back to 2022 actually. 2022, 1 through 2022, 31. Let's try that again. OK, so this was our balance for the zero balance, $20,719.96. If I go back to the balance sheet, there's the $20,719.96. And then there's no outstanding items because we're constructing our books from the bank and therefore our ending balance is still the $20,719.96 which matches the amount on the bank statement which we typed in there at the $20,719.96. So everything was reconciled. You'll recall the big issue with that first reconciliation was getting that $10,000 beginning balance in place. Once that's done, if we're constructing our books simply from the bank feeds, we should basically have a running balance that's always going to be the same at any given time. So the bank reconciliation is kind of being done real time as we go because the bank reconciliation isn't really reconciling anything from the bank to the books, but instead is just a double check to make sure that everything that's coming in from the bank has been included. Like we didn't miss something. We didn't actually delete something and we haven't had a duplicate transaction. So something got pulled in two times and we recorded it twice. So we can kind of see our bank reconciliation as we go, but I would still do it periodically at the end of the month. Run a report like this so that you can actually see the bank statement. So in other words, I would still pull up an actual bank statement because the bank statement gives you a very clear end point. So this is the end of the period and I can see my running balance or my bank balance as of that point in time. And if something is wrong, if you run into a problem and you're like, hey, I'm out of balance. Well, now you have a reconciling point. If you're just checking your stuff real time and you don't really have a sense of the beginning and ending point like you do in a bank statement, then it's going to be difficult to know what happened. Where did we run? Where did we run wrong? In order to fix something, you're going to have to have something like this, right? This is where we stood. We were correct at this point in time. And that's beginning balance is the same as the ending balance for the prior period and the prior period was in reconciled. I reconciled the prior period and it's good. So if I can do that, if I can pull up my report and say, hey, look, the prior period is good and the current period is off, then the beginning balance I would think is correct. And then I have to see the additions and the subtractions. Those are the things that we're basically reconciling if those things are improperly and everything matches up. In other words, everything on the bank statement is on the books, then the ending balance has to work. Now, remember the general rule is that if it's on the bank statement, then it should be on our books. If it's not, we're going to have to add it to our books. When using bank feeds, that's what we're doing. We're adding the stuff coming through the bank to our books. However, if it's on our books and not on the bank statement, it's possible that there's nothing wrong there if we have a full service accounting system in which we're entering stuff on our side and then just matching it to the bank statement. So if that's the case, we could quite possibly have things that we knew about that the bank doesn't know about. Those would be the reconciling items. So here we're imagining we're in balance here. Let's now do the same kind of report for the following month and we should basically be in balance there as well. I'm going to right click and duplicate. And then let's do another bank reconciliation report. And so I'm already set up, but I'm just going to change the date going to September 1st to September 30th. And then I'll change the balance to the September balance, which is 5230880. 52308.80 update. And notice again, we have the beginning balance. This is the balance that's on the books. So there's the 5380 and there's no outstanding checks or payments. There's our adjusted balance and that matches of course what we just typed in there for the statement balance. So once again, we are in balance. We don't have any outstanding items, which should be the case going forward. It should be quite easy. Now again, if you find a place where you're out of balance, say this wasn't the case, this was out of balance, then you could run the report for the prior bank reconciliation and say, okay, was I in balance as of the prior bank reconciliation? If you were in balance for the prior bank reconciliation, then you could basically check off and say, all right, that means my beginning balance was correct as of that point in time. And now I can check my additions and my subtractions here and if it's on the bank statement and tie that out over to what is on the book side of things to see if everything matches, right? So to do that, let's go to the first tab. Accounting drop down and then you can go into the bank accounts and we're working in here in the checking account. So we'll go into the checking account and you'll recall that this side of the transactions are the transactions that we have entered into the system. These are the bank transactions that pulled in from the bank and the reconcile tab is the one where everything on the bank side was on the left and everything on the right was on our side. Now in our case, all the stuff on the right on our side was pretty much not there. It was not existent because we hadn't been putting anything on our side. We've been constructing our side. We've been constructing the books from the bank feeds. However, if you're doing a full surface accounting system, you would enter the accounting stuff first on our side and then be matching it to what pulls on to the bank side of things. And in that event, if you're doing a full surface accounting system, it's likely that you would end up with outstanding checks and outstanding deposits which would be our reconciling items on our bank reconciliation that would be showing up in this area. So that's the general idea. Now if anything was off, then you could go into the account transactions and you can look at anything in here that says that it's not reconciled. If it was read and said it was unreconciled at this point in time, then that would be something that we would expect is not on the bank statement. We'd say, okay, it's not over here. That doesn't necessarily make it wrong. That just means that's going to be one of our reconciling items. If we had reconciling items like that, like a check that we wrote but has not yet cleared the bank, then we can double check to see that that check does clear the bank by seeing if it clears the bank in the following month. If it does, then that check is valid. It's a valid check and it would still just be a valid timing difference that would be reported in this reconciling item. So if you have any problems, then you can go through the actual transactions. These are the detail that should be adding up to the increases and decreases. So if your beginning balance is right, you can go through the additions and subtractions within here. So this is for September. So we can go down in September and just check all this off. We can tick and tie everything off if we needed to. 4518 and we can go back over here and say 4518. If anything was not correct, we can tick and tie everything out. 3,000 here is over here. We should see a 3,000 here. So everything should be taken tied off and that's how you would have to basically reconcile if there was anything that was basically out of balance. That's the general idea. But what I just want to point out here is once you do that first bank reconciliation, then the second bank reconciliation should be very easy. It should be somewhat automatic. And if you're constructing your books directly from the bank feeds, then your balance will be right tying to the bank in real time for the most part. But you still want to have the concept of doing the bank reconciliation so that you can find any errors if any errors happen through this concept of saying I want to see was I correct last time and then what is off this time by ticking and tying each of these accounts out. The beginning balance is right and then check your additions and subtractions, right? And then you can figure out what the issue is. And even if you are doing a full service accounting system, it still should be fairly easy to do the bank reconciliation. But in that event, you're going to want to make sure that you at least check your bank reconciliation and run the report so that you're tying out as of a point in time because in that event, your bank balance, the balance on the balance sheet will not match at any given time what's on your actual bank side of things because of outstanding items, outstanding checks, outstanding deposits. So you will need to do a bank reconciliation just to make sure that that difference is correct, right? Because that will give you confidence that your balance in the bank is correct and if your balance in the bank is correct, even if it's not the same balances on the bank statement as any given time, if you can reconcile exactly what the difference is, you are verifying not only the bank balance, but all the transactions that are going through the bank account and because we're using the double entry accounting system and because the bank and cash is the lifeblood of the company, then all the other side is basically constructing like the entire income statement. So that's why it's that huge internal control. We want to make sure that we're doing it and it should be fairly easy to do once you get past that first bank reconciliation.