Banks maintain checking with other banks to conduct their business activities. Inter- Bank reconciliation refers to the
balancing and verification of a bank holder's checking account to the periodic bank statements that are produced and sent by the bank to its customer banks.
- Checking Accounts Statements: Checking account statements are generally produced
on
a monthly basis.
The statement reflects all banking transactions.
- Verification: After the
statement from the
bank has been
received, a cross check of
your records to the
statement must take place. All items that
appear on the bank statement that you did not know about need to be segregated and the same holds true for items appearing on your records.
- Bank Balance: To balance your
checking account statement to your own
records, you must take the above
segregated items
and add or subtract each
of them as the case may be from the other set of books that were
not yet affected.
An
accounting process used to compare two sets of records to ensure the figures
are in agreement and are accurate. Reconciliation is the key process used to
determine whether the money leaving an account matches the amount spent,
ensuring the two values are balanced at the end of the recording period. Inter
company reconciliation is reconciling among the two branches of the same
company located in multiple locations. Where as one branch acts as seller to
other branch when some product is moved from Branch A to B branch.
Eg:-when Branch A sends some products to Branch B
then in this case. Branch A becomes the seller and Branch B becomes the
purchaser.
Hence
we require to reconcile between these two branches to make sure the right
figures appear on the financial statements to the management.