What you need
- The bank statement for the period, with its closing balance and date.
- Your cash book, with every entry up to that date written in.
- Last time's list of items that had not yet reached the bank, if you have one.
Only the bank side of the cash book is compared with the statement. Cash in hand is checked by counting the tin, as the guide Keeping a petty cash log for a club explains.
The steps
- Start from an agreed point. The opening balance on the statement should be the figure you agreed last time, or the bank balance at the start of the financial year.
- Tick what matches. Go down the statement line by line. For each line, find the same amount among the bank entries in the cash book and tick both.
- Look at statement lines with no tick. These are things the bank knows and your book does not: a bank charge, interest, a member who paid straight into the account. Check each, then enter it in the cash book.
- Look at cash book entries with no tick. These are things your book knows and the bank does not yet: a cheque nobody has cashed, takings paid in on the last day. List them. Do not delete them.
- Do the sum. Statement balance, less cheques and payments not yet through, plus money paid in but not yet shown, should equal the bank balance in your cash book.
- Keep the working. Write the date, the two balances and the list of outstanding items on one sheet and file it with the statement.
Do this every time a statement arrives, and always at the year end, before you present the report at the annual meeting. Wikipedia has a background article on bank reconciliation.
A short example
The invented Riverside Gardening Club on the page A worked example of a treasurer's annual report ends its year with a bank balance of 1,770.81 in the cash book. The club and its figures are a sample, not a real organisation's accounts.
Suppose the statement dated 31 December shows 1,830.81 instead. The treasurer ticks every line and one bank entry in the cash book is left without a tick: cheque 104 for 60.00, written on 31 October for the village hall. The hall has not paid it in yet.
- Balance on the bank statement: 1,830.81
- Less: cheque 104, not yet cashed: 60.00
- Bank balance according to the cash book: 1,770.81
The two agree once the cheque is allowed for. Nothing in the cash book changes. The cheque goes on the list of outstanding items, and the treasurer looks for it on the next statement.
If the two still do not agree
- Look for the exact difference. An entry of that amount may be missing from the book or entered twice.
- Halve the difference. An entry of half that amount may be marked money in when it was money out, or the other way round.
- Check Cash against Bank. An entry marked Cash that really went through the bank makes the bank balance wrong and the cash balance wrong by the same amount.
- Look for swapped figures. Two digits typed in the wrong order give a difference that divides exactly by nine.
Correct the cash book only when you have found the reason. If you do not recognise a line on the statement, ask the bank and tell the committee.
What the cash book on this site does, and does not do
The Treasurer's Cash Book shows the bank balance after every entry, in date order. To reconcile, find the last entry on or before the statement date and compare its bank balance with the statement.
The tool does not read bank statements, connect to a bank or tick entries for you.
Start with a book that adds up
Type each entry once and the cash book shows the cash and bank balances, the totals by category and whether opening balance plus receipts less payments equals closing balance. That part is free and works in your browser, with no account.
A $12 licence key adds two things: the print layout of the annual report, with signature lines, and CSV export. See exactly what is free and what the key unlocks.