What is a reconciliation?
A reconciliation compares transactions recorded in your bookkeeping system with the activity and ending balance shown on a bank or credit card statement. Its purpose is to identify and resolve differences.
Why it matters
Downloaded transactions can be duplicated, missed, or assigned to the wrong account. Reconciliation helps reveal these issues and gives greater confidence in the balances used for financial reporting.
What to review
Confirm the statement period and ending balance, then compare deposits, withdrawals, payments, transfers, and fees. Investigate uncleared transactions and unexpected differences instead of entering an adjustment simply to force a match.
Reconcile all relevant accounts
Checking and savings accounts are important, but business credit cards should also be reconciled. Credit card payments must be recorded correctly to avoid counting the same expense twice.
Make it a monthly habit
Complete reconciliations after statements become available and before reviewing monthly financial reports. A consistent process can make year-end reporting and conversations with your CPA much smoother.
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This article is general educational information, not individualized accounting, financial, or tax advice.