A procedure used in accounting called reconciliation examines two sets of information to make sure the figures are correct and consistent. Reconciliation also verifies the consistency, accuracy, and completeness of the accounts in the general ledger. However, in addition to being utilized for professional goals, reconciliation could also be used for personal ones.
In order to explain the discrepancy between two financial records or account balances, account reconciliation is extremely helpful. Due to how payments and deposits are made at different times, certain variations can be allowed. However, unexplained or unexpected inconsistencies could be a sign of fraud or accounting fraud. Accounting reconciliations can be done daily, monthly, or yearly by both businesses and individuals.
Account reconciliation cannot be done in a uniform manner. However, double-entry accounting, which records a transaction twice in the general ledger, is required by generally accepted accounting standards (GAAP) and is the most often used method of reconciliation.
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