Term · Bookkeeping
Bank reconciliation
Also called: bank rec, cash reconciliation“Why does the cash balance in the books not match the bank statement?”
A control that compares the accounting records with a bank statement and explains every difference between them. Each guide connects the definition to a finance workflow and the source records you should verify.
See the numbers in context
The sample is illustrative. Use the same structure with your own reporting period and source records.
What it tells you
A bank reconciliation compares the cash balance in the accounting records with the balance reported by the bank for a specific statement date.
The balances may differ because of timing, bank-only activity, missing transactions, duplicate entries, or errors. A completed reconciliation identifies and explains those differences.
Typical reconciling items
- Outstanding checks are recorded in the books but have not cleared the bank.
- Deposits in transit are recorded in the books but have not reached the bank statement.
- Bank fees or interest may appear first on the bank statement.
- Errors or duplicates require investigation and, when appropriate, a reviewed correction.
When it is useful
Bank reconciliation is a core close control. It supports the reliability of recorded cash and can surface omissions, duplicates, unauthorized activity, or unresolved timing items.
What to verify first
Confirm the bank account, statement ending date, and statement ending balance. Verify that the prior reconciliation was completed and that the current reconciliation reaches zero difference.
Common mistake
Do not force a reconciliation to zero with an unexplained adjustment. Identify the source of the difference, document it, and apply the organization’s review and approval process before changing the books.
“Review the bank reconciliation for this account and statement date. Confirm the bank balance, book balance, outstanding checks, deposits in transit, bank-only transactions, and final adjusted balance. Cite each source and flag unreconciled differences without creating entries.”
Further reading
Last reviewed August 13, 2026
Educational information only. Review source records and apply your organization's accounting policies and professional judgment before acting.