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Definition of 'Reconciliation'

Reconciliation is the process of bringing two sets of records or accounts into agreement. This can be done for a variety of purposes, such as ensuring that the books are accurate, identifying errors, or preparing financial statements.

There are a number of different methods that can be used to reconcile accounts. One common method is to compare the two sets of records side-by-side and identify any differences. Once the differences have been identified, they can be investigated and resolved.

Another method of reconciliation is to use a third-party source to verify the accuracy of the records. This can be done by using a bank statement, for example, to verify the amount of cash in an account.

Reconciliation is an important part of financial management. It helps to ensure that the books are accurate and that there are no errors in the financial statements. It can also help to identify potential problems early on, which can help to prevent more serious problems from occurring.

Here are some additional details about the reconciliation process:

* Reconciliation can be done on a regular basis, such as monthly or quarterly.
* It is important to have a clear understanding of the purpose of the reconciliation before starting the process.
* The reconciliation process should be documented in order to track any changes that are made.
* Reconciliation can be done manually or using a computer program.

If you are not sure how to reconcile your accounts, it is a good idea to consult with a financial advisor.

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