CandleFocus Glossary Editor
What Is Bank Reconciliation?
Bank reconciliation is the process of comparing a company’s internal financial records to its bank statement. The reconciliation process ensures that all transactions are accounted for and that all payments and funds are recorded properly. Bank reconciliation is an important tool in detecting accounting errors, fraud, and other problems with a company’s transactions.
The main goal of bank reconciliation is to reconcile the cash that appears on a company’s internal records with the cash that appears on its bank statement. This ensures that the amount of cash appearing on both statements match. Bank reconciliation statements are typically used to verify the accuracy of a company’s financial records and internal accounts.
Bank reconciliations typically include both debits (money subtracted from a company's bank account) and credits (money added to the company's bank account). These entries appear on a company’s bank statement and are recorded on its own internal accounts. Through the reconciliation process, any discrepancies between the two documents can be identified and corrected.
To properly reconcile a bank account, users must begin by identifying all of the deposits, withdrawals, and charges that have been made during a specific period (typically one month). These are then compared to all deposits, withdrawals, and charges that have been recorded on the company’s internal records. Any discrepancies between the two lists must then be addressed and corrected.
Finally, the balances of the two statements should be compared. If the two statements are correct and no discrepancies exist, then the two balances should equal one another. If the balances do not match, then the reconciliation process must be reviewed again in order to determine why the mismatch occurred.
Bank reconciliation is an important part of any company’s financial reporting process. By ensuring that all transactions are properly recorded and accounted for, companies can accurately report their financial position, protect against fraud, and maintain proper financial records.
Bank reconciliation is the process of comparing a company’s internal financial records to its bank statement. The reconciliation process ensures that all transactions are accounted for and that all payments and funds are recorded properly. Bank reconciliation is an important tool in detecting accounting errors, fraud, and other problems with a company’s transactions.
The main goal of bank reconciliation is to reconcile the cash that appears on a company’s internal records with the cash that appears on its bank statement. This ensures that the amount of cash appearing on both statements match. Bank reconciliation statements are typically used to verify the accuracy of a company’s financial records and internal accounts.
Bank reconciliations typically include both debits (money subtracted from a company's bank account) and credits (money added to the company's bank account). These entries appear on a company’s bank statement and are recorded on its own internal accounts. Through the reconciliation process, any discrepancies between the two documents can be identified and corrected.
To properly reconcile a bank account, users must begin by identifying all of the deposits, withdrawals, and charges that have been made during a specific period (typically one month). These are then compared to all deposits, withdrawals, and charges that have been recorded on the company’s internal records. Any discrepancies between the two lists must then be addressed and corrected.
Finally, the balances of the two statements should be compared. If the two statements are correct and no discrepancies exist, then the two balances should equal one another. If the balances do not match, then the reconciliation process must be reviewed again in order to determine why the mismatch occurred.
Bank reconciliation is an important part of any company’s financial reporting process. By ensuring that all transactions are properly recorded and accounted for, companies can accurately report their financial position, protect against fraud, and maintain proper financial records.