Q9: What is a bank reconciliation?

A:

A firm will keep records concerning where its cash is and where it comes from and goes to each day. Firms might keep records such as a Cash payments journal, Cash receipts journal and a Bank account ledger account. A firm’s bank will also keep a record of the firm’s bank account. It is common practice to regularly compare a firm’s bank account as recorded by its bank with its own accounting records and to identify and make sense of any differences between them. This is commonly called a bank reconciliation.