Accounts Reconciliation
Ensuring account balances match between different records.
Accounts reconciliation is the process of verifying that balances in your accounting records match external records—bank statements, credit card statements, vendor statements, and intercompany accounts. Discrepancies can indicate data entry errors, unauthorized transactions, timing differences, or fraud. Regular reconciliation is a fundamental internal control.
Example
A bookkeeper reconciles the company credit card statement monthly, matching each transaction to a recorded expense and investigating a $200 charge that doesn't correspond to any known purchase.
Why It Matters for Your Business
Reconciliation catches errors and fraud before they compound, and it's one of the most basic yet effective financial controls a business can implement.
Related Terms
More Business Terms
Break-Even Point
The sales volume at which revenue equals costs.
Budget
A financial plan estimating income and expenses.
Financial Forecast
A prediction of future financial performance.
Capital Expenditure
Funds used to acquire or upgrade physical assets.
Financial Statements
Reports summarizing financial performance and position.
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