Bank Reconciliation

Definition

Bank reconciliation is the process of comparing a company's internal records of its bank account balances to the bank's records of the same account balances. This process is used to ensure that the company's records are accurate and up to date. It is also used to identify any discrepancies between the two sets of records.

Example

For example, a company's internal records may show a balance of $10,000 in its checking account, while the bank's records may show a balance of $9,500. In this case, the company would need to reconcile the difference and determine the cause of the discrepancy. This could be due to a number of factors, such as a deposit that was not recorded in the company's records, a check that was not recorded in the bank's records, or a transaction that was incorrectly recorded in either set of records.

Equity

Bank reconciliation is an important process for companies to ensure that their financial records are accurate and up to date. It is also important for companies to identify any discrepancies between their records and the bank�s records, as this can help them to identify and address any potential issues or fraud. Additionally, bank reconciliation can help companies to ensure that they are in compliance with any applicable laws and regulations.