What is a bank statement?
Published
A bank statement is the bank's record of your account's movements over a period: opening balance, deposits, withdrawals, fees, closing balance. Its accounting significance is its nature: a document from an independent party - which is why it is the witness the books reconcile against monthly.
How to read it, accounting-wise
| What you look for | Why |
|---|---|
| Statement movements not in your books | Fees, unrecorded transfers, deductions - they need entries |
| Book movements not on the statement | Outstanding cheques and deposits in transit - timing, to be tracked |
| A movement you don't recognise at all | A security question before an accounting one - clarify immediately |
| The closing balance | One side of the reconciliation equation (that page has the full example) |
Why it doesn't replace accounting
The statement sees only cash: it knows nothing of your uncollected invoices (Al-Waha's 96,750), your unpaid obligations, your inventory, and it separates no tax from revenue. Running a business off the statement alone is the cash basis with every flaw described on that page - the statement is an excellent witness and a poor accountant.
Frequently asked questions
Paper or electronic?
Electronic (or a bank feed) imports faster and cleaner. The value is the data, not the form - and either way it belongs in the records.
The bank charged a wrong fee?
Dispute with the bank, and an entry reverses the fee when refunded - the original movement is never edited: the trail tells the whole story.