The process of comparing and reconciling a company's internal financial records with the bank statement to ensure consistency and accuracy.
Bank reconciliation is a process in which a small business owner compares their company's financial records with the bank statement to ensure accuracy and identify any discrepancies. It involves matching the transactions recorded in the accounting system with those reported by the bank to reconcile any differences. By performing regular bank reconciliations, small business owners can detect errors, uncover missing transactions, and address any fraudulent activity. This process helps ensure the accuracy of financial records, maintain proper cash flow management, and provide a clear understanding of the business's financial position. Effective bank reconciliation is essential for small business owners to make informed financial decisions and maintain the integrity of their financial statements.