Reconciliation
Definition
Reconciliation is the process of comparing two sets of records to confirm they agree or to explain why they differ. Bank and credit card reconciliations are the most common.
Example
The bookkeeper compares the bank statement to the books. The balances differ by $200, explained by an outstanding check and a missing bank fee. The reconciliation is complete.
Why It Matters
Reconciliation proves the books are accurate. It is one of the most important controls a bookkeeper performs.