Methods for reconciling expenses

When using an accounting software, there are two ways to reconcile and match expenses with withdrawals from the bank account.

Method 1: Cash is withdrawn > create a matching expense

Pull up the bank transactions from your integration with your bank account. When you see a withdrawal, create a corresponding expense.

Example: You bought a few items at the office supply store, and therefore see this bank withdrawal when looking at your bank transactions. You can now add a corresponding office supply expense for reporting purposes. The expense is now accounted for as demonstrated by the reduction in cash.

Method 2: Report an expense > cash is withdrawn > match the expense

Report a future expense. When you see the actual cash transactions, match the cash withdrawal with the expense that was previously reported.

Example: You forecast that supplies will cost $X amount of money at the beginning of the month, but the funds will not be withdrawn until the end of the month. You therefore report the expense. When the cash is withdrawn at the end of the month, you can indicate that the previously reported expense matches with this specific bank transaction.

 

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