Bank reconciliation definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Bank reconciliation can be defined as: Report that explains the difference between the book (company) balance of cash and the cash balance reported on the bank statement, for purposes of computing the adjusted cash balance. A bank reconciliation is one of the most important internal control for businesses of all sizes. The bank is tracking our cash account so by us comparing our cash balance to the bank using a bank reconciliation we can have much more assurance that we have recorded our cash transactions correct. We will generally perform bank reconciliations monthly, receiving a banks statement from the bank and comparing transactions on the bank statement to our cash transactions. The difference between the bank balance and our book balance is what will need to be reconciled, these reconciling items usually being outstanding check and deposits.
