Term · Bookkeeping
Bank reconciliation
Also called: bank rec, cash reconciliation“Why does the cash balance in the books not match the bank statement?”
Match the cash balance in the books to the bank statement and explain every timing item, missing transaction, duplicate, or error.
See the numbers in context
The sample is illustrative. Use the same structure with your own reporting period and source records.
Direct answer
A bank reconciliation compares the book cash balance with a bank statement as of the same date. Adjust for outstanding checks and deposits in transit, then investigate bank-only activity, missing or duplicate entries, and any remaining difference. Do not post an unexplained adjustment just to make the balances agree.
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 ending balance. Check the prior reconciliation and match cleared transactions. Without the bank statement, a book-only review cannot confirm that the difference is zero.
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. If the bank statement is available, compare its ending balance with the book balance and list outstanding checks, deposits in transit, bank-only transactions, and any unexplained difference. Cite each source; if the statement is unavailable, say the reconciliation cannot be verified. Do not create 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.