Hi Ray,

I'm confused on the transfer of funds between bank accounts / cash journal. In your above example after doing two internal transfers both amounts (100USD & 84.18EUR) are sitting in the Liquidity Transfer account 101701.

Don't we have to reconcile them with each other to make sure that Liquidity Transfer account zeroes out?

My understanding of doing funds transfer between bank accounts (as well as cash journals) is following: (transfer fund from A account to B account)

1) Send money from account/journal A

2) Receive money at account/journal B

3) Reconcile the Liquidity Transfer account entries with outstanding payment and receipt accounts

4) Record the Bank Statement (or cash book) at account/journal A with negative value

5) Record the Bank Statement (or cash book) at account/journal B with positive value

6) Reconcile the Bank Statement entry at account A

7) Reconcile the Bank Statement entry at account B.

Are we doing it right, or overly complicating transaction records.

Kind regards,

Alaubek

In my example, a $100 debit from the first Internal Transfer (out of USD Account) and a $100 credit from the second Internal Transfer (into the EURO account) are sitting in the Liquidity Transfer account 101701. So following my steps (you probably made a small mistake) the account will always balance and reconciliation is up to you (not required). Your list of steps is restating my example (apart from step 3) so you have the correct procedure.

Dear Ray, thank you very much for a rapid reply and explanation!