Bank reconciliation basics Updated November 2026

Reconciliation does not balance

Compute the difference between the two adjusted balances and test it: divisible by 9 points to transposed digits; equal to one transaction means an item missed or posted twice; twice a transaction means a wrong sign; a round figure suggests a fee or transfer. Then re-tick the statement line by line.

Syntax

Difference = Adjusted bank balance - Adjusted book balance; test: divisible by 9, equals one item, equals 2 x one item

Part	What it is
`Divisible by 9`	Transposition (e.g. 540 recorded as 450, difference 90) or a slide (540 as 54)
`Equals one transaction`	Item omitted on one side or posted twice
`Equals twice a transaction`	Item added where it should have been subtracted
`Round number`	Fee, transfer or automatic payment not yet listed

Examples

Adjusted bank 7,300; adjusted book 7,390; difference 90

Result: 90 / 9 = 10, so look for transposed digits. Check #118 for 540 was recorded as 450 in the books; correcting it brings the books to 7,300.

Adjusted bank 4,750; adjusted book 4,790; difference 40

Result: The statement shows a 40 wire fee not listed on the book side; subtracting it balances the reconciliation.

Adjusted bank 2,100; adjusted book 2,500; difference 400

Result: A 200 NSF check was added to the book side instead of subtracted; 2 x 200 = 400. Flipping the sign balances it.

Common mistakes

Forcing it with a plug entry to Miscellaneous Expense: the error will resurface next month and the cash balance is wrong in the meantime.
Comparing the wrong dates: a deposit dated the 1st of next month on the books is not a deposit in transit for this month.
Looking only at this month: last month's outstanding checks that cleared this month must be removed from the list.

Practice Reconciliation does not balance

These drills check your answer on live data, free, no account needed.

Digits swapped in the booksClassify every line, enter the correction for any error, then the adjusted bank and book balances.
Errors on both sidesClassify every line, enter the correction for any error, then the adjusted bank and book balances.
Recorded twiceClassify every line, enter the correction for any error, then the adjusted bank and book balances.

Questions

What if I cannot find the difference?

Re-tick every statement line against the ledger in the other direction (ledger to statement), check the opening balances agree with last month, and verify the prior month's outstanding list. Small unexplained amounts may be written off with approval, but document them.

Can the bank be wrong?

Yes. If a check cleared for a different amount than written or a deposit was credited short, ask the bank to correct it and keep the item on the bank side meanwhile.

Transposition errorA transposition error swaps two digits, such as 540 entered as 450. The difference is always divisible by 9, which makes it quick to spot in a reconciliation.
Book errorsA book error is a company mistake in recording cash: a check entered for the wrong amount or a deposit recorded twice. Adjust the book side and correct it.
Bank errorsA bank error is a mistake on the statement, such as another company's check charged to your account. Correct it on the bank side, no entry, and tell the bank.
Prior month outstanding checksHow last month's outstanding checks and deposits in transit roll into this month's bank reconciliation: remove those that cleared, keep those that did not.