What is meant by reconciling an account?
What is meant by reconciling an account?
1. Usually, an account has a lot of transactions in a particular year. As accountant and auditors, we have to ensure that each and every balance we are reporting in the financials of our entities has to be true and fair and be free from any material misstatements
2. Account reconciliation or reconciling an account usually means a process whereby a set of 2 financial records are checked to verify the accuracy of an account
3. The most common type of reconciliation that we see is the Bank reconciliation statement, which compares the balance as per bank statement and balance of bank as per general ledger
4. It takes both the balances, computes the difference between them and sets out to give out valid reasons on why the 2 balances aren't tallying
5. Once, we have valid reasons, it is said reconciliation is done and we can have confidence in the account balance we are reporting
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