What is Reconciliation in Accounting Terms?

Reconciliation in accounting is the process of balancing the company's bank accounts.

Reconciliation in accounting refers to the process of a company balancing its bank accounts with its bank statements. The process is done to balance out the accounts and ensure all transactions have been posted into the accounts.

Bank Statements

Companies reconcile their bank accounts monthly when they receive bank statements for the accounts. Most companies have a computerized accounting system where they keep a record of all deposits and checks, so the reconciliation is typically done on the computer.

Checks and Other Debits

Bank statements show all checks and other debits that have cleared the bank. To reconcile, a person checks off all checks in the check register that are shown on the bank statement. Any other charges or credits are also marked off. Bank fees may need to be added into the computer to keep the computer balance even.

Deposits and Other Credits

All deposits are marked off on the computer check register to verify accuracy. Any other credits are also marked off. If they don't appear on the check register, they must be added in.

References

• Universal Accounting: Bank Reconciliation
• Accounting Coach: Bank Reconciliation