Bank reconciliation

Matching every transaction in your books against the bank statement, so the two agree.

Example

Your books say £43,210 and the bank says £43,210 — reconciled.

Important

It is the only routine check that catches missed transactions, duplicates, fraud and bank errors. Unreconciled books are a guess with a decimal point.

Related terms

• Month-end close — The routine of finishing a month's books: recording everything, reconciling the bank, checking categories, and producing the statements.
• General ledger — The complete record of every transaction, sorted into the accounts from your chart of accounts. Every report is built from it.
• Bookkeeping — Recording every transaction accurately and on time.
• Cash flow — The actual movement of money in and out of your bank account, as distinct from revenue you have earned but not been paid.

Lessons that explain it

• Where to actually start keeping books — Day one, with no accounting background and no system. What to record, where to put it, and the three habits that make everything after this easy. (12 min)
• The month-end close — The two-hour routine that turns bookkeeping into a decision tool. A checklist you can run on the first working day of every month. (12 min)

All 176 terms in the Founder glossary