Bank reconciliation basics Updated November 2026

Reconciling items

Bank-side reconciling items are things the bank has not processed yet or got wrong: deposits in transit (add), outstanding checks (subtract) and bank errors. Book-side items are things the company learns from the statement: interest and collections (add), service charges, NSF checks and automatic payments (subtract) and book errors.

Syntax

Bank side: +DIT, -OC, +/- bank errors | Book side: +Interest, +Collections, -Fees, -NSF, -Auto payments, +/- book errors

Part	What it is
`Deposits in transit`	Bank side, add
`Outstanding checks`	Bank side, subtract
`Bank errors`	Bank side, direction depends on the error
`Interest, note collected, EFT receipts`	Book side, add
`Service charges, NSF checks, auto debits`	Book side, subtract
`Book errors`	Book side, direction depends on the error

Examples

Item: deposit of 700 made Jan 31, on Feb statement

Result: Deposit in transit, bank side, add 700. No entry.

Item: monthly account fee 15 on the statement

Result: Book side, subtract 15. Entry: Dr Bank Fees 15 / Cr Cash 15.

Item: check #502 for 310 cleared by the bank as 130

Result: Bank error of 180 in our favor on the statement, so subtract 180 on the bank side until the bank corrects it. No entry.

Item: customer paid 900 by EFT, shown on the statement only

Result: Book side, add 900. Entry: Dr Cash 900 / Cr Accounts Receivable 900.

Common mistakes

Listing an item on both sides: each reconciling item belongs to exactly one side.
Treating a bank error as a book error and posting it: the bank fixes its own mistakes; the item stays on the bank side until it does.
Missing automatic debits (loan payments, subscriptions): scan the statement for every line without a check number.

Practice Reconciling items

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

A busy monthClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.
Everything from the bankClassify every line on the bank statement and in the cash book, then enter 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.

Questions

How do I decide which side an item goes on?

Ask who is missing the information. If the bank has not seen it yet, bank side. If the company learned it from the statement, book side.

Do reconciling items carry over to next month?

Timing items do, until they clear. Book-side items are posted and disappear. Bank errors stay on the bank side until the bank corrects them.

Bank reconciliation stepsThe steps of a bank reconciliation: tick deposits and checks, adjust the bank balance for timing items, adjust the books for bank items, match and post.
Deposits in transitA deposit in transit is cash recorded in the books that the bank has not yet credited. Add it to the bank statement balance and make no journal entry.
Outstanding checksAn outstanding check has been written and recorded but has not cleared the bank. Subtract the total from the statement balance and carry unpaid ones forward.
Bank reconciliation journal entriesThe journal entries that follow a bank reconciliation, one per book-side item: service charges, interest, NSF checks, notes collected, book errors.