Deposits in transit, outstanding cheques, and making a reconciliation actually balance
A bank reconciliation is an identity, not four independent sums. Here is what makes it hold.
2 min read
Your ledger and your bank statement disagree for a small number of legitimate reasons. A reconciliation lists them, and if the list is complete the two adjusted balances are equal — not approximately, exactly.
The four items
| Item | Side | Why |
|---|---|---|
| Deposits in transit | Add to bank | You recorded receipt; the bank has not credited it yet |
| Outstanding cheques | Less from bank | You recorded payment; the cheque has not been presented |
| Unrecorded bank credits | Add to book | Interest or a direct receipt you did not know about |
| Unrecorded bank charges | Less from book | Fees the bank took without telling you first |
Balance per bank, plus deposits in transit, less outstanding cheques, gives the adjusted bank balance. Balance per books, plus unrecorded credits, less unrecorded charges, gives the adjusted book balance. They should be the same number.
Three subtleties that break it
Reconciling items start where your bank data starts
If you have imported statements from June onward, a ledger movement dated in April can never be matched — the statement that cleared it was never uploaded — while the bank’s own balance already reflects it. Counting it as a deposit in transit double-counts the whole of your pre-import history, which is how a first reconciliation reports a difference the size of the account’s entire life.
"In transit" is as at the reconciliation date
A ledger line matched to a bank line the bank dated after your reconciliation date genuinely had not reached the bank on that date. It is still in transit as at then, even though it is matched now. Reading the current match status instead of the position on the day leaves the identity out by the amount of every such pair.
A statement straddling the date cannot contribute its closing balance
That figure is the bank’s balance at the statement period’s end, which is days after the ledger balance you are setting it against. Roll the opening balance forward through that statement’s own lines up to your date instead.
Cheques written but not presented
Credit the bank when the cheque is issued, and treat the uncleared ones as a reconciling item. The alternative — a "cheques issued not presented" clearing account with a second posting when it clears — gives you two posting paths for one payment and a second place for them to disagree. The register is a memorandum record; marking a cheque cleared moves the reconciliation, not the books.
A difference is a finding, not an error
Do not build a reconciliation that refuses to be saved unless it balances. A non-zero difference is exactly the thing you need recorded, dated and visible so that it gets investigated. Blocking the save just means it is never recorded at all.