What is bank reconciliation?
Agreeing your books to the bank statement: ticking off entries that cleared, explaining the ones that did not (outstanding cheques, in-transit deposits), and finishing when the difference is zero. It is the single strongest routine control a small business has.
Example
Your ledger says the bank account holds $31,076.34; the bank statement says $2,167.18. The gap is not an error — it is two deposits still in transit and four cheques that have not cleared.
Ticking off what cleared and listing what did not brings the difference to exactly zero, which is what 'reconciled' means. A remaining unexplained difference is a finding to investigate, not a number to adjust away.
QuickBooks-Desktop-style reconciliation, with or without a bank feed. Bank reconciliation →
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