What Is Reconciling of Accounts?

Reconciling of accounts is the process of matching the records between two sets of accounts in order to make sure that the transactions between them are accurately recorded and reported. This is an important financial step for businesses and organizations to take in order to make sure their books are balanced and revenues and taxes are accurately accounted for. Reconciling of accounts is the process of making sure that two different sets of accounting records match.

Why Is Reconciliation of Accounts Necessary?

Reconciling of accounts is important to businesses and organizations for several reasons. It helps detect any discrepancies between the two sets of records and allows the business to correct any mistakes that have been made. Reconciling also provides an accurate measure of the cash balance and total assets in the company. Additionally, it is a requirement of generally accepted accounting principles (GAAP) and can be used in audits to provide an accurate picture of the company’s financial health.

How to Reconcile Accounts

The process of reconciling of accounts involves comparing the two sets of records in order to find any discrepancies or errors. The reconciliation process should involve a thorough review of the financial records in order to ensure that the transactions are recorded accurately and that the records are in line with the company’s internal policies and procedures. This process should also involve tracking down the source of any discrepancies and making the necessary adjustments in order to make both sets of records reconcile. This process can be done manually or via automated systems such as accounting software.

Where Can I Find Additional Resources?

There are numerous resources available to help understand and complete the process of reconciliation of accounts. The American Institute of Professional Bookkeepers provides online classes that will help you understand the process of reconcile accounts. Additionally, the U.S. Small Business Administration provides a guide on conducting a financial reconciliation. Your college’s business department may also provide courses or resources related to reconciliation.