RECONCILE: Definition, Meaning, and Why It Matters in Bookkeeping
- Jenny Marie
- Mar 23
- 2 min read
Reconciling ensures that accounting software records (such as Quickbooks®) and bank statements match which maintains correct financial data for a business owner to base decisions off or file correct tax returns.
Definition of RECONCILE
Reconcile means to bring things into agreement, harmony, or consistency. In financial and accounting terms, reconciling refers to the process of ensuring that two sets of records match, such as comparing bank statements with bookkeeping records. A reconciliation would be the noun and mean that the act of reconciling was done. There are features in all accounting software programs to do this. The most widely used software is Quickbooks® but other runner up's are: Xero, Zoho Books, Freshbooks and Wave Accounting (never heard of that last one). We use Quickbooks with our clients but we aren't opposed to using other's if they are as effective as QBO.
In financial and accounting terms, reconciling refers to the process of ensuring that two sets of records match, such as comparing bank statements with accounting records.
Examples of RECONCILE in Use
We need to reconcile the bank accounts in Quickbooks® so we can see if there are any discrepancies between it and the data we have in QBO.
You can reconcile inventory with what is physically in stick compared to what is logged in the system.
With a credit card who is in collections and no longer receives a statement, you can reconcile the balance by comparing the records to the payment confirmation letter.
"Bookkeeping isn’t just about entering numbers—it’s about making sure everything is tracked and correct so one can make smart decisions and plan for financial goals." - Jenny Marie
Why RECONCILIATIONS Matter
Reconciliations are crucial for maintaining accurate financial records, detecting discrepancies, and preventing fraud. Whether in personal finance or business bookkeeping, reconciling bank accounts ensures everything is correct and up to date.
Whether in personal finance or business bookkeeping, reconciling bank accounts ensures everything is correct and up to date.
Common Misconceptions or Misuses
Reconciliations do not need to be done. This is one of the biggest errors you can make in your personal finance or business accounting software!
If it automatically "greens out" on Quickbooks® - then it must be correct. Not always! Many transactions have the same vendor and same amount. You must ensure that you double check the statement especially if there are loads of transactions.
Anyone can do it. It takes a trained eye to see discrepancies that the average, untrained person would miss.
Final Thoughts
Reconciliation is a vital process for financial accuracy and fraud prevention. They should be done monthly for bank accounts so the owner has access to accurate reports.
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