The term bank account represents a financial account maintained by a bank or other financial institution. These institutions have many customers. Usually, every customer has a separate bank account that separates their transactions from others. Therefore, a bank account records the financial transactions between the bank and a customer.
Bank accounts are crucial for all entities that require banking transactions. These entities may include companies, businesses, organizations or individuals. Usually, banks offer several types of bank accounts, consisting of current, savings, loans, and other accounts. Most banks also allow customers to hold various bank accounts, which are separate from each other.
Usually, customers keep a record of all the transactions they have with the bank. However, some events may occur which the customer may not know. For these events, the bank account will get updated based on the type of transaction. However, the customer must understand how they affected their bank balance. It is where bank account statements help them.
What is a Bank Account Statement?
A bank account statement is a written document provided by banks to customers. It contains an official summary of all the financial transactions that occur within a bank account. Usually, there is a period that these statements cover. However, customers can request a summary for longer or shorter periods.
A bank statement allows customers to understand the transactions that occur in their bank account. As mentioned, some customers may keep a record of their own, while others may not. Either way, the bank statement provides more detailed information about the financial transactions occurring within the bank account. This statement includes both payments and receipts into the bank account.
A bank statement includes essential information about the bank account and the financial transaction within it. Usually, it states information about the customer, the period it covers, the bank account, etc. Similarly, it may include a summary of the financial transactions within that period. However, that may not appear on every bank statement.
Most importantly, a bank statement includes all the financial transactions that occur within a bank account. Usually, these transactions involve payments from and receipts into the bank account. It also consists of any fees charged by the bank for facilitating transactions or providing services. Similarly, it shows the bank balance at the start and end of the covered period.
Overall, a bank statement is a written document stating the financial transactions occurring within a bank account. These transactions relate to a specific period mentioned on it. Usually, the bank statement provides the customer with a bank-side record of their bank account. This information can be critical in reconciling bank accounts with accounting records.
How does the Bank Account Statement work?
Entities require bank accounts to conclude various transactions. For this, they go to a financial institution and create an account with it. There are several accounts from which they can choose, including savings, current, loan, and other accounts. Once they create an account with the bank, they can start depositing money or making payments.
Usually, every customer keeps a record of the transactions that go through their bank accounts. Some customers may, however, not do so. Either way, customers will require a bank-sided record of the transactions that occur in their bank account. There are several reasons why this is necessary. Most of these reasons will cause the bank and customer’s records not to match.
Usually, the differences between the customer’s and bank’s records come from unrecorded transactions. These include fees charged by the bank, which the customers do not know. Similarly, some customers may receive payments in their accounts without their knowledge. In some cases, the payments they make to others may get delayed, thus, causing a difference in the bank balance.
All of the above reasons can cause the bank’s record to differ from the customer’s expectation. Therefore, most banks provide a monthly bank account statement to the customer. However, those are not the only reasons why customers require bank statements. These statements can provide several other benefits, for example, helping check for fraudulent transactions.
The bank account statement usually includes essential information about the bank account and its holder. As mentioned, this statement covers a specific period, which is monthly. For the period it covers, this statement includes details for all financial transactions within the account. Some banks may provide this statement through the mail, while others may prefer a digital version.
What does the Bank Account Statement include?
As mentioned, the bank account statement includes essential information about the bank account. Similarly, it contains details about the financial transactions for a period. The presentation of a bank account statement will differ from one bank to another. However, it will cover information that is critical for all bank accounts.
Some of the primary information covered in a typical bank statement include the following.
A bank account statement includes details about the customer’s bank account. Usually, this involves the account name, which may be savings or checking. Similarly, it will consist of the bank account number. Some banks may censor the number for security reasons. Lastly, it may include the customer’s name. These can be a company, business, organization, or individual.
A bank account statement also includes the account balance for the bank account. Usually, this balance is the closing amount available for spending. This amount is the remaining balance in the bank account at the end date of the period covered. However, bank account statements also include the beginning balance for each period.
Most bank account statements provide a reconciliation of the beginning balance to the closing balance. The presentation of this feature may differ from one bank to another. Usually, banks show this reconciliation under the account summary. Customers can calculate closing balance themselves by using the following formula.
Closing balance = Opening balance + Additions to the account – Deductions from the account
The most crucial part of the bank account statement is the details about transactions. Usually, this statement includes two sides, a debit, and a credit. The debit side consists of any deductions from the bank account. In contrast, the credit side contains details of any additions to the customer’s account. The bank account statement also provides a description of what the transaction is and its origin.
The most critical information provided in the bank account statement is the period it covers. As mentioned, this statement only includes transactions for a month. However, customers may get more or fewer details based on their requests. The time period provided in a bank statement limits the time for which it covers financial transactions.
A company, ABC Co., holds a bank account at XYZ Co., its official bank. The company receives a monthly bank account statement from its bank. This statement includes essential details about the company’s transactions in the bank account for the month. An example of the bank account statement that ABC Co. receives from its bank is as follows.
A bank account statement is a written statement that summarizes the financial transactions in a bank account. This statement comes from the bank and covers a specific period, usually monthly.
For most customers, the bank account statement is crucial in providing a bank-sided record of their bank account. This statement must cover some critical information, as mentioned above.