what is bank reconciliation statement

A bank reconciliation statement is a document prepared by a company that compares its recorded bank account balance with the balance the bank lists. This statement includes all transactions, such as deposits and withdrawals, from a given timeframe. The purpose of a bank reconciliation statement is to ensure that a company has recorded all its banking transactions properly and that its ending balance matches the amount the bank says it has. Regularly creating a bank reconciliation statement allows a company to find errors by comparing its ledger with its bank statement, and then correct its records as needed. Bank reconciliation statements can help identify accounting errors, discrepancies, and fraud. By reconciling bank accounts, a company can understand its cash flow and manage its accounts payable and receivable. The more frequently a company produces bank reconciliations, the more accurate its financial management will be, with reduced chances of error or irregularities.