Account Reconcilement

AAA

DEFINITION of 'Account Reconcilement'

The process of confirming that two separate records of transactions in an account are equal. This can happen internally with a bank or broker, such as between general ledger entries and individual account records. Reconcilement also occurs when a customer of a bank or broker confirms that his or her personal records match what is reported on periodic statements. Ther term can also refer to balancing the books and records of a business with software programs and data entries.

INVESTOPEDIA EXPLAINS 'Account Reconcilement'

Account reconcilement within financial institutions is a key regulatory and compliance function, and it is a primary focus for outside regulators in their routine audits of the firm. Customers of these firms should also keep an accurate record and report discrepancies promptly.

With the advent of computer systems to record transactions and client positions, reconciling often amounts to fixing small discrepancies of a few dollars, or even pennies, between one source and another. The longer an error goes uncovered, the more difficult it will be to reconcile the two records.

RELATED TERMS
  1. Accounts Receivable Subsidiary ...

    An accounting ledger that shows the transaction and payment history ...
  2. Account Statement

    A periodic summary of account activity with a beginning date ...
  3. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  4. Liability

    A company's legal debts or obligations that arise during the ...
  5. General Ledger

    A company's main accounting records. A general ledger is a complete ...
  6. Performance Audit

    An audit performed on an asset manager by an outside accounting ...
RELATED FAQS
  1. What's the difference between the general ledger and a general journal?

    The difference between a general ledger and the general journal is that the general journal is considered the initial book ... Read Full Answer >>
  2. How do you calculate credits and debits in the general ledger?

    A general ledger acts as a record of all accounts and their transactions. Balancing the ledger involves subtracting the total ... Read Full Answer >>
  3. Why do businesses calculate accrued expenses?

    Whenever a business recognizes an expense before it is actually paid, it can make an accrual entry in its general ledger. ... Read Full Answer >>
  4. How can I use Excel as my business's general ledger?

    For a small business with few transactions, a savvy business owner can use Excel as a substitute for accounting software. ... Read Full Answer >>
  5. What is double entry bookkeeping and how does it work in the general ledger?

    Double entry bookkeeping is the concept that every accounting transaction has two affects on a company’s finances. The general ... Read Full Answer >>
  6. Should companies break out accounts receivables into subledgers?

    All companies that sell on credit should have subledgers for their accounts receivables, especially if the company also acts ... Read Full Answer >>
Related Articles
  1. Investing Basics

    12 Things You Need To Know About Financial Statements

    Discover how to keep score of companies to increase your chances of choosing a winner.
  2. Credit & Loans

    Check Your Credit Report

    Make sure there are no errors holding you back from obtaining a loan.
  3. Retirement

    7 Common Investor Mistakes

    Find out how to avoid - or fix - these frequent investing errors.
  4. Professionals

    An Inside Look At Internal Auditors

    Find out why these number crunchers are part of every chief officer's dream team.
  5. Stock Analysis

    Getting Acquainted With Treasury Stock

    When publicly traded businesses decided to buy back some of their outstanding shares, it becomes treasury stock. Treasury stock confers no voting rights or dividends, but helps boost shareholder ...
  6. Markets

    How To Analyze A Company's Financial Position

    Find out how to calculate important ratios and compare them to market value.
  7. Professionals

    Financial History: The Evolution Of Accounting

    Follow accounting from its roots in ancient times to the profession we now depend on.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center