Account Reconcilement

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.

BREAKING DOWN '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. Audit

    An unbiased examination and evaluation of the financial statements ...
  2. Accounts Receivable Subsidiary ...

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

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

    A government commission created by Congress to regulate the securities ...
  5. General Ledger

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

    A company's legal debts or obligations that arise during the ...
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. Economics

    What are Receivables?

    Receivables are debts, transactions or other obligations owed to a company by its debtors or customers.
  6. Economics

    What's Recorded in a Cash Book?

    A cash book is an accounting book that records all cash receipts and cash payments before they’re recorded in a business’s general ledger.
  7. Economics

    What is a Share Premium Account?

    The share premium account is an equity account found on a company’s balance sheet.
  8. Economics

    Explaining Financial Analysis

    Financial analysis is a general term that refers to using financial data to make business and investment decisions.
  9. Economics

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  10. Economics

    Understanding the Accounting Cycle

    An accounting cycle consists of the traditional procedures performed to record business events and transactions in a company’s accounting records.
RELATED FAQS
  1. Why is the use of contra accounts so important for maintaining ledgers?

    Contra accounts have been used in financial accounting to verify the balance of another corresponding account since Renaissance ... Read Full Answer >>
  2. What are the accounting entries when a company issues a callable bond?

    Callable bonds are listed as long-term liabilities on balance sheets, similar to other types of bonds, unless they mature ... Read Full Answer >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. 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 >>
Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  3. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  5. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
Trading Center