How to Reconcile Accounts: A Complete Guide for Bookkeepers

Account reconciliation is the process of comparing two sets of records to confirm they agree. When they do not agree, you find out why and fix it. This applies to bank accounts, credit card accounts, accounts receivable, accounts payable, and any ledger account where discrepancies can accumulate over time.

Why Reconciling Accounts Matters

• It gives you a verified, audit-ready cash balance at month end
• It catches data entry errors before they compound across multiple periods
• It detects unauthorised transactions and potential fraud early
• It ensures your financial statements are accurate for tax and investor reporting
• It satisfies auditor requirements for internal controls

How to Reconcile a Bank Account

This is the most common reconciliation. The goal: your book balance matches the bank statement balance after accounting for timing differences.

1. Download the bank statement CSV for the period
2. Export your ledger transactions for the same date range
3. Match each bank transaction to a ledger entry (amount + date within 1–3 days + description)
4. List any outstanding checks (issued but not cleared) and deposits in transit (recorded but not posted)
5. Adjusted bank balance = Bank ending balance + deposits in transit − outstanding checks. This should equal your book balance.

How to Reconcile a Credit Card Account

Credit card reconciliation follows the same logic but has two common quirks: sign conventions are often reversed (charges appear as positive, not negative), and the statement period may not align with your accounting month.

How to Reconcile Accounts Receivable

AR reconciliation compares your AR subledger (individual customer balances) to the AR control account in your general ledger. They must agree to the cent.

1. Run an aged AR report from your invoicing system
2. Pull the AR control account balance from your general ledger
3. The sum of all open invoices in the AR report must equal the GL balance
4. If they differ: look for invoices posted to the wrong period, payments applied to the wrong invoice, or credit notes not yet processed

How to Reconcile a General Ledger Account

For any other balance sheet account (prepaid expenses, accrued liabilities, intercompany accounts), the process is: compare the GL balance to your supporting schedule (a spreadsheet listing what each balance consists of), and reconcile every line.

Common Causes of Account Reconciliation Differences

• Timing differences — transactions recorded in different periods on each side
• Data entry errors — transposed digits, wrong amounts, wrong accounts
• Duplicate transactions — the same entry posted twice
• Missing transactions — a payment or receipt recorded on one side but not the other
• Currency rounding — for multi-currency accounts, FX rate differences