What does it mean to perform an account reconciliation?
Performing an account reconciliation means that you compare two sets of information in the accounting records and make sure that it agrees (i.e. the balance is the same or there is an immaterial difference).
One of the most common reconciliations that should be performed on a monthly basis is a bank reconciliation. Bank reconciliations are used to determine differences that have been reported between a company’s cash balances and the amounts reported by the bank.
The visual below illustrates what items need to be adjusted for the bank statement and what items need to be adjusted for in the accounting records:
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