What is an Account Reconciliation?
Account reconciliation is the process of cross-checking accounts. Account reconciliation is mostly related to bank reconciliation. Every month bank statement should be reconciled with the cash book to know if there is any mismatch of transactions taking place. These reconciliations should be done before auditing the financial statements.
Advantages of Account Reconciliations
A key objective of account reconciliation is to check the accounts of a firm. Regular checking of accounts can prevent bigger mismatches in the future. Accounts reconciliation is especially needed for bank accounts, mismatch in the bank account may lead to cash deficiency. Every month bank provides a bank statement according to which bank reconciliation should be done.