Bank reconciliation

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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.

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 (now known as a bank statement) would have been hand written by a clerk and checked carefully by the bank manager. The statement could be taken as a reliable source, as banks' primary business was 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 the bank and matched to a bank ledger kept by a company's accountant.

The character Bob Cratchet, 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.

External links

Further guide:

[Bank Reconciliation] Explanation of the bank reconciliation process.

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