Bank reconciliation
From Wikipedia, the free encyclopedia
Bank reconciliation is the process of matching and comparing figures from accounting records against those presented on a bank statement. Less any items which have no relation to the bank statement, the balance of the accounting ledger should reconcile (match) to the balance of the bank statement.
It allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies.
[edit] History
When ledgers were written manually in large books, regular checks were important to ensure they remained in balance. It was important to have a reliable source against which to check the accounts ledger.
The statement of account from a bank would have been hand written by a clerk and checked carefully by the bank manager. The statement can be taken as a reliable source, as banks' primary business is to ensure their ledgers correctly tracked the flow of funds. Hence the bank balance at the end of a given period could be obtained from bank and matched to a bank ledger kept by a company's accountant.
The character Bob Cratchit, a clerk in the novel A Christmas Carol by Charles Dickens, famously spent his Christmas eve completing the final 'bank reconciliation' for his employer, Ebenezer Scrooge. Only when reconciliation was complete could he go home for Christmas dinner with his family.
[edit] External links
Further guide:
- Bank Reconciliation Explanation of the bank reconciliation process.
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