Reconciliation is the restoration of friendly relations. When it comes to banks, they are in a veritable civil war with themselves and must constantly come to the table to negotiate a ceasefire once again. The two factions? Bank statements and financial records. Okay, there isn’t a bank civil war. That we know of…
When these two fails to line up, money has been lost and must be found; adjustments are made, and differences in records understood.
Typically, the adjustments reflect events such as deposits made too late to be recorded in the bank statement, outstanding checks that have not been cleared yet, and things like service charges that have not yet been posted.
The process of balancing the two involves manual changes to both books until they match. Discrepancies must be noted and understood.