Banks keep track of all transactions that increase or reduce the balance of their customer accounts. All these transactions are mainly withdrawals (reduce balance) or deposits (increase balance) and are recorded and issued to the account holder in what is called the passbook.
Account holders with many transactions per day usually agree to receive this passbook daily. Additionally, they will require more detailed information. When the information received has more details, such as fees, interests and notes, the passbook is then called “Bank statement“.
So big companies, who are usually holders of bank accounts with many transactions, would be receiving the bank statement as a daily basis, with the opening balance, ending balance, deposits and withdrawals recorded in the specific date of the bank statement.
On the other hand, companies keep track of the payment transactions in their bank accounts in what’s called the cashbook. All these transactions should match those received by the bank.
The main purpose of bank accounting is to make possible the bank reconciliation between the figures of the cashbook and the passbook (bank statement). For this purpose we should have:
- A General Ledger account that represents the real bank account. This account should only be posted by the bank statement items received from the bank, so that its balance matches the bank balance.
- Additional G/L accounts, which are called bank clearing accounts, used to post the payment transactions of the company. Typically there’s one per payment method, and the items posted are cleared in the reconciliation process.
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