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Account reconcilement is the act of comparing and affirming multiple records of the same financial information. To “reconcile the books” is to compare different records of the same accounts to ensure that they match up.
One might reconcile all the different record-keeping for the same account, such as copies of checks and receipts, to be sure that they add up to the balance and ledger shown on a bank account statement. It could be that the recipient of a check has not yet cashed it, and it is important to keep all records “synced” with one another.
One might also use the accounting journal and trial balances to reconcile the general ledger of the business. Subsidiary ledgers might also detail the revenues and expenses of certain general ledger line-items, and these must be reconciled with the general ledger as well.
Reconcilement is used to identify mistakes so that they can be remedied. It can also help to detect fraud.
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