RECONCILIATION

  • Companies must reconcile their accounts to prevent balance sheet errors, check for fraud, and reconcile the general ledger.
  • In double-entry accounting, each transaction is posted as both a debit and a credit.
  • Individuals also may use account reconciliation to check the accuracy of their checking and credit card accounts.

Reconciliation in Business Accounting

Companies must reconcile their accounts to prevent balance sheet errors, check for fraud, and avoid auditors’ negative opinions. Companies generally perform balance sheet reconciliations each month, after the books are closed for the prior month. This type of account reconciliation involves reviewing all balance sheet accounts to make sure that transactions were appropriately booked into the correct general ledger account.