All 23 Reconciliations questions
More in Reconciliations
What is a reconciliation in accounting? What is a sub-ledger to general-ledger reconciliation? What is a control account and how does it relate to reconciliations? What is the difference between a two-column and a running reconciliation? Why are regular reconciliations important for fraud prevention? What is the frequency at which key reconciliations should be performed? What are reconciling items and how are they classified? How do you reconcile a supplier statement to the AP ledger? What is the GR/IR reconciliation and why does it matter? How do you reconcile intercompany AP/AR balances?
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Accounts Payable & Receivable › Reconciliations

What is a bank reconciliation?

Beginner

Answer

A bank reconciliation compares the company's cash ledger to the bank statement, explaining differences such as outstanding checks, deposits in transit, bank fees, interest, and errors. Reconciling to an agreed balance confirms recorded cash is accurate and surfaces unrecorded items or fraud like unauthorized withdrawals.
Book balance 10,000; Bank 11,200.
  + Deposits in transit 500  - Outstanding checks 1,800
  + Bank interest 100  - Bank fees 20 (adjust books)
  Reconciled balance agrees.
Real-world example The bank reconciliation reveals an unrecorded $20 bank fee and a $500 deposit in transit, tying book cash to the bank.

Common follow-ups: What are outstanding checks and deposits in transit? | Which items adjust the books?

Cash Application Payment Runs Reconciliations
All 23 Reconciliations questions