Reconciliation
Bank reconciliation
Bank reconciliation explains the difference between the book balance and an external bank statement for the same date.
Reviewed by the Booksmrt bookkeeping teamLast reviewed 2026-07-27
How it works in the books
A reconciliation checks completeness and timing by matching cleared activity, identifying outstanding items, and investigating unexplained differences. It is one of the core controls in a monthly close.
Example
If the books show $12,300 and the statement shows $12,000, a valid $300 outstanding deposit may explain the difference.
What can go wrong
Forcing a reconciliation with a plug entry hides the difference instead of resolving it.
Compare Bank reconciliation
Sources
Educational information only. Booksmrt provides bookkeeping services, not tax, legal, audit, or investment advice. Confirm material accounting and tax decisions with the appropriate professional.