what does reconciliation mean in accounting

In accounting, reconciliation refers to the process of comparing and verifying the accuracy of two sets of financial records to ensure they match. This includes reconciling internal accounts, like a company’s general ledger, with external documents such as bank statements, credit card statements, or vendor invoices. The purpose of reconciliation is to identify discrepancies, correct errors, and ensure that financial statements reflect an accurate and truthful financial position. Regular reconciliation helps businesses maintain compliance, prevent fraud, and ensure the integrity of their financial data.