When we carry out a reconciliation exercise, we simply want to:
- verify the completeness and accuracy of a particular part of the accounting records by comparing it with another record.
The following table reflects some of the types of reconciliation normally performed:-
|
Type of Reconciliation |
Records being compared |
|
|
Bank reconciliation |
Bank account |
Bank statement (external record) |
|
Debtors control reconciliation |
Control account (nominal ledger) |
Listing of balances from debtors ledger (personal ledger) |
|
Creditors control reconciliation |
Control account (nominal ledger) |
Listing of balances from creditors ledger (personal ledger) |
|
Creditors account reconciliation |
Individual account in creditors ledger (personal ledger) |
Statement prepared by supplier (external record) |
The above two reconciliations (debtors’ control and creditors’ control) deal entirely with the firm’s own records, while two (bank and creditors’ account) also deal with records maintained outside the firm.
The final output of the reconciliation is the Reconciliation Statement which will throw out those differences/discrepancies between the firm’s own records and external records.