meaning of reconciliation in accounting

Reconciliation in accounting is the process of comparing two sets of financial records to ensure they match and are accurate. This typically involves comparing internal financial data, like cash balances and bank statements, to detect discrepancies, errors, or fraudulent activity. The purpose of reconciliation is to confirm that financial transactions are correctly recorded, improving the integrity and accuracy of financial statements. Regular reconciliations, such as bank reconciliations and balance sheet reconciliations, help businesses maintain compliance with accounting standards, ensure transparency, and make informed financial decisions.