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Bank reconciliation


As at any particular time cheques, etc., issued or received, may not be banked, the balance shown on a bank statement at a particular date will not necessarily agree with the balance shown at that date in the cash book. It is therefore necessary, in order to prove that the records have been properly kept, to prepare a bank reconciliation. This begins with the balance in the cash book and then details the cheques issued but not banked, and the monies received but not banked. The former will be added and the latter deducted. After any other necessary adjustment for direct bank debits or credits the resultant balance should be the same as that on the bank statement.

Reference: The Penguin Business Dictionary, 3rd edt.