The first reconciliation for a bank account is always the hardest, because your opening account balance in Quicken rarely equals the opening balance on your bank statement. (These two balances typically match only when you open an account after you start using Quicken, when the balances are both zero.) Even if you started out in Quicken by copying the bank’s opening balance from a statement, the first reconciliation might uncover stray transactions from earlier periods.

So the first time you reconcile your account, a small discrepancy between your Quicken balance and the bank’s doesn’t necessarily mean there’s an error on either side. You may simply want to dispense with that discrepancy, and then things will be much clearer next month. Fortunately, Quicken can generate a transaction that adjusts your account’s opening balance to match the balance on your bank statement, as described in the box on Section 7.4.

Part of Quicken’s charm is that it doesn’t care if you create, edit, or delete transactions right in the middle of reconciliation. But that’s not necessarily the easiest way to go about it. If your Quicken register is up to date, you can reconcile your account in mere seconds. If you want to experience that pure, unadulterated pleasure, take a moment before you reconcile to make sure that you’ve entered all the transactions in your account:

Reconciling an account has two simple, distinct steps. The first is to choose the account you want to reconcile and give Quicken some basic statistics about the account: the ending balance from your bank statement, and any service charges and interest earned during the statement period. This section describes how to kick off account reconciliation.

In the Account Bar, choose the account that you want to reconcile. (You can also press Ctrl+A to open the Account List window, select the account, and choose Go To in the window menu bar.) In the register menu bar, choose Reconcile.

Depending on whether the account is set up for online access, Quicken opens one of two dialog boxes, both shown in Figure 7-1.

Figure 7-1. Top: Accounts without online access ask for service charges and interest. Bottom: You can reconcile accounts set up to use online access to your paper statement or to the online balance every time you download transactions.

Here’s how to fill in the text boxes for reconciliation summary information:

After you’ve entered this information, click OK to proceed to the second part of reconciliation, described in the next section.

When you click OK in either the Statement Summary or Reconcile Online Accounts dialog boxes, Quicken opens a grand version of the Statement Summary window listing the money that flows out of your account in the Payments and Checks column and money flowing in under the Deposits column. As Figure 7-2 illustrates, your assignment is to mark every transaction that your bank has cleared and, when the Difference value is zero, click Finished to complete the reconciliation.

If you download transactions from your financial institution and match them to the transactions in Quicken, there’s not much for you to do besides click Finished. The bank isn’t likely to disagree with itself, and you’ve already cleared most transactions during your downloads. But if you record transactions in Quicken yourself, you must mark the cleared transactions in Quicken to reconcile them to the paper statement.

Figure 7-2. Top: To reconcile an account, you mark transactions as cleared in the top half of the Statement Summary dialog box. Bottom: Quicken calculates how much you’ve cleared in payments and deposits, which it shows as Cleared Balance in the bottom right corner of the dialog box. The Statement Ending Balance is the amount your bank shows on the statement. Difference is the difference between your cleared balance and the statement ending balance. When Diff equals zero, Quicken and your bank agree. Click Finished and bask in the glory of a perfect reconciliation.

The Statement Summary window groups payments and charges on the left side with deposits and other credits on the right side. Match each transaction on your statement to a transaction recorded in Quicken, and then add a checkmark in the Clr column to let Quicken know it’s cleared. Check it off on the paper statement, too, so you’ll know you’ve done it. If you get to the end and the Difference hasn’t yet reached zero, an unchecked transaction in either place is often the culprit. (If you can’t track down the problem and are desperate to stop searching for that unaccounted-for $1.50, see the box on Section 7.5.)

Clicking in the Clr column toggles the checkmarks on and off. If you download transactions from your bank, Quicken automatically marks them as cleared, so you usually don’t have to turn on any transaction checkmarks when you reconcile. What you might have to do, especially if you record transactions manually in the register, is turn off the checkmarks for transactions that you recorded in the wrong account, as duplicates, or mismatches. After you turn off a checkmark, in the window menu bar, choose Delete to remove the transaction from the register.

When you click Finished, Quicken displays the Reconciliation Complete dialog box with a hearty congratulation to make you feel good about your accomplishment. The dialog box asks if you want to create a reconciliation report. If you use Quicken only for personal finances and generally breeze through reconciling without problems, click No, the most popular choice by far. On the other hand, for a record of the results of the account reconciliation, whether for the paper trail that accountants and bookkeepers need or to resolve potential problems in the future, click Yes.

Even if you reconcile your statements month after month without a hitch, that doesn’t necessarily mean your accounts are error-free. For example, you may notice that there are a few transactions from four months ago languishing uncleared. When you review these transactions, you’ll probably find a charge you made on a different credit card, a duplicate that you forgot to delete, or some other minor problem. Every so often, the answer is that the check didn’t make it to the vendor or your deposit never made it to the bank, so it’s worthwhile to occasionally research these old and uncleared transactions.

Even if your Quicken register is rife with errors and omissions, getting through reconciliation is surprisingly painless. Quicken immediately updates the Statement Summary window with changes you make in the account register window, so you can jump to the register window and make your changes. When you return to the Statement Summary window, the changes are there—ready to be marked as cleared.

Here’s how you make changes while reconciling:

When you work in the register window during reconciliation, you’ll see an extra button—Return to Reconcile, as illustrated in Figure 7-3. After you add, edit, and delete the transactions, you can click Return to Reconcile to jump back to the Statement Summary window or, at the bottom of the Quicken main window, click Reconcile.

The Statement Summary window includes a Finish Later button for saving your reconciliation work without completing it. But the only time you’re likely to click this button is when you’ve run into a discrepancy that requires some research. For instance, you’re relaxing on Sunday by reconciling your checking account, and notice a questionable bank charge. You can click Finish Later and return to your reconciliation after you’ve talked to your bank on Monday morning.

Figure 7-3. You can make changes and corrections to transactions in the register during the reconciliation process. When you’re ready, click “Return to Reconcile” (indicated here by the pointing hand).

In the Statement Summary window, click Finish Later. Quicken closes the window, but it remembers what you’ve cleared. You’ll see a lower-case “c” in the Clr column for each transaction that you’ve marked, which indicates that the transaction is only tentatively cleared.

When you’re armed with fresh information and a strong dose of caffeine, choose Reconcile in the register menu bar. The Statement Summary or Reconcile Online Account dialog box opens, containing the summary values you typed in on your first attempt. If they’re still correct, click OK to open the Statement Summary window for another try.

When you attempt to modify a transaction that you’ve already reconciled, Quicken would do well to set off flashing lights and sirens warning you of the havoc you’re about to wreak. After all, the transaction appeared on your bank statement because it was a done deal, and changing it in Quicken doesn’t change it in the real world. Nevertheless, Quicken instead lets you change or delete reconciled transactions with nothing more than a mild message box asking if you’re sure you know what you’re doing.

But make no mistake: Making changes to reconciled transactions is the quickest way to create mayhem in your accounts. For example, in the register window, deleting a reconciled transaction removes its amount from the Opening Balance when you try to reconcile the account. And that means that the Opening Balance won’t match the beginning balance on your paper bank statement (which is one reason you might be reading this section).

Sometimes, subtle errors, missing transactions, or an errant click of an uncleared check can foul your attempts to reconcile an account. Here are some techniques to help bring your records back into balance: