Reconciliation

Reconciliation

Reconciliation is the process of comparing two sets of records to ensure they are in agreement. In accounting, it typically refers to verifying that the balances in a company’s accounting records match those in its bank statements or other financial records.

This process helps identify any discrepancies, such as errors, omissions, or fraudulent transactions. For example, if a company’s cash balance as per its books is $10,000, but the bank statement shows $9,500, the reconciliation process would involve investigating the $500 difference to determine the cause, which could be outstanding checks or bank fees.