 let's go ahead and reconcile and so we're going to go into the process now this is the reconciliation kind of page or process that we're going to go through note one of the myth-busting concepts that i had is the process of reconciling here is not actually the bank reconciliation so once we do this process and reconcile that's good it should give us a sense of assurance that we got things done but if you got audited or something like that they're not going to ask you for this page you know they're going to add they're going to ask you for the report that's generated from this page so and that will look something like this and so we're going to have like a like the cleared balance which is in essence the bank balance right here 61 241 and that ties out to what is here 61 241 and then we're going to have any outstanding items these are the the outstanding checks and deposits the difference that will reconcile between what is here to what is on the actual books now this number 88 645 25 which is the register balance in theory would tie out to what's on our balance sheet it does not yet because we're going to have to make some adjustments oftentimes when you do the bank reconciliation the general rule will be if there is something on the bank statement that isn't on our books so i'm going through here i'm checking everything off boom boom boom and i'm finding them over here on our books if there's something on the bank statement that's not in our books we're probably going to have to add it to our books unless the bank is wrong meaning if i saw like a a hundred dollar charge from the bank that i didn't put on my books unless i'm going to tell the bank hey take that charge off and even if i did they would take it off in the current period so i'd still have to record it unless it was wrong i would have to i would have to add it in my books which is generally the case if there's something on my books that's not on the bank statement then that might be because of a timing issue which would mean it's a reconciling item it's a check possibly that we wrote that has not cleared it's a transaction that we have entered we have knowledge about but the bank does not yet because it has not yet cleared and those will be the reconciling items and so those will be the things that are unchecked or undotted over here whatever you want to call the process of checking them off okay let's just let's just give a quick overview of what this screen is telling us it can be a little daunting to first look at we've got the statement ending balance this is the balance on the bank statement the 61 241 85 that we just typed in to the system we've got the the cleared balance which represents the beginning balance at this point in time which is just that 25 000 which is different than the 30 000 and that's one of our beginning balance problems and then you've got the little item down here the beginning balance minus the payments plus the the deposits that's what's making up the cleared balance so once these things are are the same the statement balance is equal to the cleared balance that's when we have reconciled and so this is showing the difference between the two over here so if I pulled out the trustee calculator I could just say okay what are you doing here what are you doing bank rec we've got the 61 281.45 minus 25 000 there's the 36 281 45 so in other words this is the beginning balance that we checked off and we're going to check everything off then down below so for example we're we have an error we have a problem here because this doesn't tie out but let's say that that did tie out and then I'm going to go down here and I'm going to start checking everything off like the expenses for example if I check off an expense that's going to be added up here and then the deposits if I check off a deposit that's going to be added up here now if I look at everything on the bank statement and I check everything off here and I verify everything down here deposits and checks then the beginning balance plus or minus the payments plus the deposits that have been checked off have to add up then to the same balance as the statement balance so I'm basically just double checking that everything's on the bank statement is on our books and then you might say well okay that's kind of redundant what's the point the point is that the things that we didn't check off are going to be the items that make the reconciliation so we're looking for those things that aren't the same the things that are on our books that aren't on the bank statement that are the timing differences if they're on the bank statement and not on our books we're looking for those two so we can fix them put them on our books but if they're on our books but not on the bank statement those are the items that are going to be the reconciling items on the report these unclear transactions so that's going to be the general idea here I'm going to uncheck these off let's just go through the rest of the data you've got the edit of the info this is the beginning balance the ending balance and you've got your starting information there you could save it for later finish now if you finish now you're going to force it to reconcile save it for later close without saving now notice you very rarely want to say finish now because what you're doing when you do that is you're forcing a transaction to take place if you're saying this difference is not zero and you're saying finish now then you're going to tell QuickBooks to force a journal entry that's going to that's going to reconcile the two the problem with that and you might say hey look what if I get this down to like five dollars if I get that down to five dollars I'm just going to force it to reconcile because I don't care if there's a five dollar difference between the what's on my books and what's on the bank statement or if it's off by five dollar whatever I'll just record it but the problem is that five that five dollar difference could have been due to like 20 deposits and 50 check forms right there could be a whole lot of transactions that just happened to net out to five dollar that five dollar difference that's that's going to be the issue so anything other than a complete zero over here lowers the accuracy of your internal control the bank reconciliation a lot and it should be really easy to get to zero because we're just going to we're going to force it to be zero right because we're just going to say the beginning what if there's something on the bank statement that's not on our books I'll just fix it on our books so I can check it off so it has to work out and it's got to work and hopefully I'll convince you of that as we complete the reconciliation but just note again like as an accountant if someone gave me their books and I was trying to say do I have confidence in this books being correct at all the fact that they have quick books gives me way more confidence than just a handwritten income statement but if they have a reconciliation the fact that they did the reconciliation gives me a lot more confidence but if I look at the reconciliation and I see these these bit these these forcing it to reconcile things my my my confidence goes way down right way down even if it's only a reconciliation of a few dollars because again that few dollars could be made up of of multiple transactions and remember remember what the goal is the goal isn't to try to get this balance to be exactly double checked and correct I don't I'm not looking to see that balance as being completely right as of this point in time that's important but what I also want to do is give a double check of all the detail all these transactions those transactions are not only affecting cash they're affecting the other side of the transaction in the double entry accounting system because cash is the lifeblood of the company it's a huge internal control if we can double check all those we have a huge double check of those if we can get this down to zero because now we've known we know exactly what the difference is between the balance on the bank statement and our balance and if we know what that difference is I have confidence not only in these outstanding items which I'm going to want to double check to see if they cleared in the follow period but also we have confidence about all these other items down below okay enough with that so then down here you've got you can sort by you have your filtering options up top so you can find you can clear status you can you have the transaction type payee date and then you have the range that you can put up top we can also sort by date we can sort by type we can sort by reference number and so on and so forth and then we can also have these filtering options which are probably the most common in which we will be using we can sort by payments so now I can just look at the payments and focus in on just like this side of our bank statement we can sort by deposits and just focus on the deposit side to tie those out and we can sort by all of them which is the default and then you've got the the show show me around that's going to give you your little guides here and then you've got your print option and your card