Bank statement - What is an bank statement? Read more here

Learn about account statements and how they can help your business keep track of all transactions. Gain insights into how account statements contribute to accurate financial management in your online store

Get a full overview of your financial transactions with a bank statement - essential for accurate accounting and financial management

What is a bank statement?

A bank statement is a document that provides a detailed overview of all transactions made on an account over a specific period. It includes both deposits and withdrawals and shows the total balance after each transaction. Bank statements are often used by both businesses and individuals to keep track of finances and ensure that all transactions are accurately recorded.

Introduction to bank statements

Bank statements play a central role in accounting and financial management. They provide a clear and detailed overview of a business's or individual's financial activities over a given period. This makes it easy to identify and track all income and expenses, helping to ensure that there are no discrepancies in the accounting records.

Use of bank statements in accounting

In accounting, bank statements are used for several purposes. First and foremost, they are used for account reconciliation, which means comparing the transactions recorded in the accounting software with those listed on the bank statement. This ensures that all transactions are properly recorded and helps identify any errors or missing entries.

Additionally, bank statements can be used to analyze a company's cash flow. By reviewing income and expenses, you can get a clear picture of where the money is coming from and where it is being spent. This is essential for making informed decisions about budgeting, investments, and other financial strategies.

Example of practical calculation

Practical example of a bank statement

Let's say you run a webshop, and you want to review your bank statement for the last month. Your bank statement might look like this:

  • 01/05/2024 - Payment from customer A - 500 DKK - Balance: 500 DKK
  • 03/05/2024 - Payment to supplier B - 200 DKK - Balance: 300 DKK
  • 05/05/2024 - Payment from customer C - 700 DKK - Balance: 1000 DKK
  • 10/05/2024 - Payment to supplier D - 150 DKK - Balance: 850 DKK
  • 15/05/2024 - Payment from customer E - 300 DKK - Balance: 1150 DKK
  • 20/05/2024 - Payment to supplier F - 400 DKK - Balance: 750 DKK

In this bank statement, you can see all your deposits and withdrawals, as well as the current balance after each transaction. If you notice a transaction that doesn't match your own records, you can investigate it further to ensure your accounting is accurate.

Assume you want to calculate the total income and expenses for the month:

Total income:

  • 500 DKK (customer A)
  • 700 DKK (customer C)
  • 300 DKK (customer E)
  • Total: 1500 DKK

Total expenses:

  • 200 DKK (supplier B)
  • 150 DKK (supplier D)
  • 400 DKK (supplier F)
  • Total: 750 DKK

By subtracting the total expenses from the total income, you can calculate your net amount for the month:

Net amount: 1500 DKK - 750 DKK = 750 DKK

How to use bank statements effectively

To use bank statements effectively in your accounting, make sure to review them regularly. It is recommended to reconcile your bank statements with your internal accounting records at least once a month. This will help you catch any errors early and ensure that your finances are always accurate and up to date.

Additionally, you can use bank statements to identify trends in your income and expenses. This can provide valuable insights into which areas of your business are performing well and where you may need to make adjustments to improve your financial health.

Finally, remember to store your bank statements securely. Although many banks and financial institutions offer digital bank statements, it is good practice to download and save copies for your own records. This ensures that you always have access to important financial data if you need it in the future.

Closing remarks

Bank statements are an indispensable tool in any business's accounting process. They provide a clear and detailed overview of all financial transactions and help ensure that your accounting is accurate and reliable. By using bank statements correctly, you can improve your financial management, reduce the risk of errors, and make more informed decisions about your business's future.

We hope this guide has given you a better understanding of what a bank statement is and how you can use them effectively in your own business. If you have any further questions, feel free to contact us for more information.

Learn about account statements and how they can help your business keep track of all transactions. Gain insights into how account statements contribute to accurate financial management in your online store