Timing differences can cause your nonprofit a few accounting headaches, but these discrepancies are usually easily spotted and addressed during cash reconciliation in a fund accounting software. This discrepancy is known as a “deposit in transit,” a common timing difference between the cash GL and the bank statement. on the last day of the month will be listed on the cash GL as that month’s transactions, but they will most likely not be listed on the bank statement until the next month. Similarly, deposits made to the bank at 5:00 p.m. As an example, an outstanding check written on July 31 will show up in the July cash GL, but it may not appear on the bank statement until August. In a perfect world, any differences between the cash general ledger and bank statement would be merely timing differences.

How Timing Differences Create Discrepancies Bank service fees and check fees are separate cash withdrawal items that should be entered as credits to the cash account. Deposits to the bank will be debits to the cash general ledger account, while checks will be credits to the cash general ledger. Cash records, also known as your cash general ledger (or GL), contain a list of all cash transactions during the month. When it comes to how to do cash reconciliation for your nonprofit, the process is really about comparing your organization’s cash records to the monthly statement provided by the bank. Steps to Reconciling the Bank Statement.How Timing Differences Create Discrepancies.However, understanding the principles of bank reconciliation accounting may lead to more accurate transaction entries and a cash reconciliation process that could just make you smile.

Is reconciling your organization’s cash records to the monthly bank statement a task that causes you to shudder? Ideally, reconciling your nonprofit bank statement is a task best accomplished through a specialized true fund accounting software.

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