All 23 Reconciliations questions
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What is the GR/IR reconciliation and why does it matter? How do you reconcile intercompany AP/AR balances? How does automation (reconciliation software) improve the process? How do you reconcile accounts receivable to revenue? What makes a reconciliation 'review-ready' for audit? How do you reconcile petty cash and expense floats? What is the account reconciliation process at month-end close? How do you deal with aged, unexplained reconciling items? How does reconciliation support the financial-close controls and audit? How do you reconcile cash across the bank statement, cash book, AR receipts, and AP payments?
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Accounts Payable & Receivable › Reconciliations

What is a three-way reconciliation (e.g., for trust/client accounts)?

Intermediate

Answer

A three-way reconciliation ties three records together—for trust accounts, the bank balance, the book/cash balance, and the total of individual client ledgers must all agree. It's a stringent control used where funds are held on behalf of others (law firms, escrow), ensuring no client money is misallocated.
Real-world example A law firm's monthly three-way reconciliation confirms bank, book, and client-ledger totals all match to the cent.

Common follow-ups: Where are three-way reconciliations required? | What three records must agree?

Cash Application Reconciliations Aging Analysis
All 23 Reconciliations questions