Bank Transactions & Deposits vs. Revenue/Expense Adjustments in Bank Rec.

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Posted on by skpaul

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Good Afternoon,

I'm dealing with approximately 20 different GP companies, each having their own manager and each with a bank account they need to reconcile monthly which means that currently, I'm dealing with 20 bank rec's that are slightly different in the manner in which they are reconciled. I'm currently working on company-wide standards to correct this issue, but I need some help understanding the difference between adjustments during the bank reconciliation process and the bank transaction/deposit method. One thing I need to clarify prior to proceeding is that we do not use GP to track our accounts receivable, therefore we do not need to assign a payment to an invoice in GP.

The majority of our markets use the bank rec method because it is a one step process, and they were instructed to by our installation team. It seems to me, however, that you give up a certain amount of flexibility (most notably in my mind - voiding the transaction) if necessary. I also understand that deposits only effect the bank module, while certain bank transactions only effect the G/L.

Personally, I use the two step method, which the opposite of what happens in most of my markets. I was initially going to make the that the company standard, but I don't know if the extra step is truly necessary. So, before I go and make a change that adds work (albeit not a whole lot of work, but still an extra step), is there something I'm missing that makes the bank transaction/deposit method the better than reconciliation adjustments?

Thank you for your help

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skpaul 135 on at

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RE: Bank Transactions & Deposits vs. Revenue/Expense Adjustments in Bank Rec.

Hi Leslie,

Thank you for answering my question; it certainly clarifies the differences and what we need to do going forward.

Steve
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L Vail 65,271 on at

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RE: Bank Transactions & Deposits vs. Revenue/Expense Adjustments in Bank Rec.

Hi,

The theory behind the two-step method is to get your GP checkbook register to agree with your bank statement. A company may collect payments during the day and then package them all together and make a single deposit to the bank. Imagine your deposit includes 20 different checks from 20 different customers. If you used the Bank Transaction method, you will have 20 different entries in your check register. If you do not in fact deposit each check separately to the bank, your check register will show 20 deposits and your bank statement will only show one. If the bundles do not match, reconciliation is very difficult.

You mentioned 'adjustments during the bank reconciliation process' these are different from regular bank transactions. These adjustment transactions are meant to handle any service charges or interest income etc that is discovered on the bank statement that hadn't been considered prior to the reconciliation. You could just as easily create bank transaction entries for these items, it's just easier sometimes if you do it as part of the reconciliation routine.

You do not lose the ability to void a transaction. You can void bank transactions as well as deposits. One general rule I always like to teach is that EVERYTHING you do in the Bank Transaction or Bank Transfer windows writes to the general ledger. Conversely, NOTHING you do in the Bank Deposit entry window will write to the general ledger.

Kind regards,

Leslie