Definition of Reconciliation

Comparing different (usually two) set of records to make sure that the figures in both sets are balanced and correct. It is an accounting process which is used to determine the cash outflow matches with the amount spent and ensuring two values are accurate and balanced.

Explanation of Reconciliation

For example, we reconcile the balance in the general ledger account Cash in Checking to the balance shown on the bank statement. The objective is to report the correct amount in the general ledger account Cash in Checking. You will often need to adjust the general ledger account balance for items appearing on the bank statement that were not entered in the general ledger account.