If your business has an account at a bank, you will receive a checking account or (Bank Statement) regularly, usually every month or 3 months. Your checking account can be a useful instrument for managing your business finances because it contains various information about your business spending and income transactions during these transactions using the bank account in question.
A checking account is a report given by a bank to an account holder. If the account that you use for a company is a business-specific account, then the checking account that you receive can be useful as proof of financial statements. The checking account contains information about the transactions made by the bank to the account and also a statement of cash balances from the account.
Parts of a Current Account
Understanding the parts of a checking account is very important to get the full benefits of your business checking account. The basic information below makes it easy for users to find out transactions and account data. The following is a detailed section of a general checking account.
a. Bank Information
Your financial institution’s contact information will be in the bank statement. In the bank statement includes the bank name, address, and telephone number of the bank’s Customer Service. With this bank information, you can easily contact your bank if there is a difference between your business financial statements and bank statements (reconciliation).
b. Business Information
In the checking account will be listed information about your company or business. Like your name as a business owner, business name, address, and telephone number.
c. Account Information
Whereas account information explains basic information about your bank account. Like the name of the account owner and account number.
d. Period Date
In the checking account will be listed the period of each published checking account. For example, a checking account issued on November 1, 2018, contains all transaction information for the October 2018 period, from October 1 to October 31, 2018.
e. Account Summary
Consists of account balances at the beginning and end of the period, total withdrawals, and total deposits. Account summaries are usually located near the top of the current account page.
f. Transaction Summary
Whereas the transaction summary will look most prominent in the checking account. Transaction summary contains a list of each transaction that occurred during a period that is sorted chronologically. For each transaction that occurs will be listed date, description, nominal amount of the transaction that occurred, and account balance after the transaction.
Important Functions of Current Accounts
After you understand the parts of a checking account in detail, you also need to know the functions of the checking account. Here are four functions of a general checking account for your company or business.
a. Record all expenses
Your checking account provides a record of all your expenses, especially if you use checks, debit cards, or credit cards as your preferred payment method. A checking account gives information about where and for what money you spend. If you want to make a budget but don’t know how much money is allocated into each cost category, your checking account can be an appropriate source of reference.
b. Account Activity
The checking account also tells you how much money you have in your bank account from the beginning to the end of accounting, how much you save and how much you spend. The checking account also mentions any type of interest that is credited to your account.
c. Account Reconciliation
One of the main functions of your checking account is to provide a means to reconcile your financial statements. This process compares the nominal amount of a bank account on your financial statement with a direct report from the bank to ensure compatibility. It is important to reconcile your checking account because if in some condition you think that the amount of cash in the bank according to your financial statement shows a large nominal, even though it is not according to the cash in your bank’s real balance, then you can recklessly spend it and will result in worse future. . Reconciling your checking account will also reveal unexpected costs or invalid expenses in the cash account at your bank. More about invalid expenditure will be explained in the next point.