6-step guide

How to reconcilea bank statement

A complete step-by-step guide — from gathering your records to posting final adjustments. Covers every common discrepancy and how to fix it.

Personal accountsBusiness accountsQuickBooks & Excel

the process

6 steps to reconcile any bank statement

1

Gather your records

You need two things: your bank statement for the period, and your internal records (accounting software, ledger, or checkbook register) for the same period.

✓Download or print your bank statement PDF
✓Open your accounting software or spreadsheet
✓Note the statement period (start and end dates)
✓Note the opening and closing balances on the statement
2

Compare deposits

Go through each deposit on your bank statement and confirm it appears in your books. Mark each one off as you go.

✓List all deposits on the bank statement
✓Tick off each one that appears in your records
✓Identify deposits in your records NOT on the statement (deposits in transit)
✓Identify deposits on the statement NOT in your records (missing entries)
3

Compare withdrawals

Do the same for every withdrawal, payment, and debit. This is where most discrepancies appear.

✓List all debits/withdrawals on the bank statement
✓Tick off each one in your records
✓Identify checks/payments in your records NOT on the statement (outstanding checks)
✓Identify bank charges in the statement NOT in your records (e.g., monthly fees, NSF fees)
4

Adjust the bank balance

Start with the closing balance on your bank statement and adjust for timing differences.

✓Start: bank statement closing balance
✓Add: deposits in transit (recorded by you, not yet on statement)
✓Subtract: outstanding checks (written by you, not yet cleared)
✓Result: adjusted bank balance
5

Adjust the book balance

Start with your book (ledger) balance and adjust for items on the bank statement you haven't recorded yet.

✓Start: your book (ledger) closing balance
✓Add: interest earned (on statement, not in books)
✓Subtract: bank service charges (on statement, not in books)
✓Subtract: NSF returned check charges (if any)
✓Result: adjusted book balance
6

Compare — they must match

Adjusted bank balance should equal adjusted book balance. If they don't, work through the common error checklist.

✓Adjusted bank balance = adjusted book balance ✓
✓If not equal: check for transposition errors (÷9 test)
✓Check for duplicate transactions in books
✓Check for wrong-side entries (÷2 test)
✓Post any final adjustments to your accounting records

quick reference

Common reconciliation differences — and how to fix them

DiscrepancyAdjustHow to fix
Outstanding checksBank sideSubtract from bank balance. If 6+ months old, contact payee or void and reissue.
Deposits in transitBank sideAdd to bank balance. Confirm it clears on the next statement.
Bank service chargesBook sideSubtract from book balance. Record in your accounting system as a bank charge expense.
Interest earnedBook sideAdd to book balance. Record as interest income in your books.
NSF returned checkBoth sidesDeduct the amount from book balance. Chase the payer for re-payment.
Bank errorBank sideAdjust bank balance in reconciliation. Contact your bank to report the error immediately.
Recording error (your books)Book sideFind and correct the entry. Common causes: transposed digits, wrong account, duplicate entry.

Reconciliation won't balance? Try this

Divide the difference by 9

If it divides evenly → transposition error (e.g., $45 entered as $54)

Divide the difference by 2

If it divides evenly → transaction recorded on wrong side (debit vs credit)

Search for the exact difference

Look for a transaction matching that exact amount — it may be missing or duplicated

Check prior period

If last month's reconciliation was off, errors carry forward to this month

Look for bank adjustments

Interest corrections, fee reversals, and adjustments sometimes appear mid-statement

Skip the manual work — upload your PDF

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Bank reconciliation FAQ

What does it mean to reconcile a bank statement?+−
Reconciling a bank statement means comparing your bank's record of transactions against your own records (accounting software, ledger, or spreadsheet) to confirm they match. Any differences — missing transactions, bank fees, timing gaps, or errors — are identified and resolved. It's done monthly to ensure your books are accurate.
How long does it take to reconcile a bank statement?+−
For a personal account with 50–100 transactions, manual reconciliation takes 15–30 minutes. A business account with hundreds of transactions can take 1–3 hours manually. Using accounting software (QuickBooks, Xero) or uploading your PDF here to get a pre-categorized CSV reduces that to minutes.
What are common differences found during bank reconciliation?+−
The most common discrepancies are: (1) outstanding checks — checks you've written that haven't cleared yet; (2) deposits in transit — deposits you've recorded that haven't posted to the bank yet; (3) bank service charges — fees on the statement you haven't recorded in your books; (4) bank errors — rare but possible; (5) NSF returned checks — a check you deposited that bounced.
What is an outstanding check in bank reconciliation?+−
An outstanding check is a check you've written and recorded in your books, but the payee hasn't cashed it yet — so it doesn't appear on your bank statement yet. You subtract outstanding checks from the bank balance when reconciling. If a check remains outstanding for 6+ months, contact the payee.
What is a deposit in transit?+−
A deposit in transit is a deposit you've recorded in your books but that hasn't appeared on your bank statement yet — typically because you made it near the end of the statement period. You add deposits in transit to the bank balance when reconciling.
What if my bank reconciliation doesn't balance?+−
If the difference isn't zero: (1) check for transposition errors — digits swapped (e.g., $54 recorded as $45); (2) look for duplicate entries in your books; (3) check if you missed any bank fees or interest credits; (4) divide the difference by 9 — if it divides evenly, it's likely a transposition error; (5) divide by 2 — if it divides evenly, you may have recorded a transaction on the wrong side (debit vs credit).
How often should you reconcile a bank statement?+−
Monthly is the standard — reconcile as soon as your statement closes. Businesses with high transaction volume should reconcile weekly. Never let reconciliation fall more than 2–3 months behind, as errors become harder to trace and fraud is harder to catch.
Can I reconcile my bank statement automatically?+−
Yes — accounting software like QuickBooks, Xero, and Wave can import your bank transactions directly via bank feeds and auto-match them to your records. Alternatively, upload your bank statement PDF here to extract a clean, categorized CSV that's easy to match against your accounting records.

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