{"id":3245,"date":"2018-01-05T10:03:09","date_gmt":"2018-01-05T15:03:09","guid":{"rendered":"https:\/\/sagestaging.wpengine.com\/en-us\/blog\/?post_type=sage_glossary&#038;p=1665"},"modified":"2026-01-16T08:22:51","modified_gmt":"2026-01-16T13:22:51","slug":"what-is-bank-reconciliation","status":"publish","type":"sage_glossary","link":"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-bank-reconciliation\/","title":{"rendered":"What is bank reconciliation?"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/\" class=\"entry-header__link\">Glossary definition<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tWhat is bank reconciliation?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"What is bank reconciliation?\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-bank-reconciliation\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n\n\n<p>&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-bank-reconciliation\">Bank reconciliation<\/h2>\n\n\n\n<p>Bank reconciliation is the process of comparing a company\u2019s bank statement with their own financial records. The purpose of a bank reconciliation is to reconcile the differences in reporting between the bank and the company\u2019s own books.<\/p>\n\n\n\n<p>Typically, adjustments need to be made and noted on the company\u2019s end to account for the differences in the records \u2013 two of which are for \u201coutstanding checks\u201d (checks from the company not yet cleared) and \u201cdeposits in transit\u201d (deposits from the company made too late to be reflected on the bank statement). Additional adjustments that may need to be made include service charges or maintenance fees from the bank that have not yet been reported by the company.<\/p>\n\n\n\n<p>Take the following bank reconciliation example, reflecting the three adjustments mentioned above:<\/p>\n\n\n\n<p><strong>Initial bank statement = $6,450<\/strong><br>\n<strong>Initial company books = $5,000<\/strong><\/p>\n\n\n\n<p>Adjustments to be noted:<br>\n\u2022 $2,000 in outstanding checks<br>\n\u2022 $500 in deposits in transit<br>\n\u2022 $50 in bank service charges<\/p>\n\n\n\n<p>First, the company will note the amount of the adjusted bank statement, taking into account their outstanding checks and deposits in transit:<\/p>\n\n\n\n<p>\u2022 $6,450 \u2013 $2,000 + $500 = $4,950<\/p>\n\n\n\n<p>The company will then adjust their books to reflect the service charges from the bank:<\/p>\n\n\n\n<p>\u2022 $5,000 &#8211; $50 = $4,950<\/p>\n\n\n\n<p><strong>Adjusted bank statement = $4,950<\/strong><br>\n<strong>Adjusted company books = $4,950<\/strong><\/p>\n\n\n\n<p>The bank reconciliation is complete when the adjusted bank statement matches the adjusted company records. In this example, the process is complete. If there are any discrepancies between the records, they must be found and noted.<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p class=\"cta-content__title\">Get a roundup of our best business advice in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-8949a954-88b2-43bb-8b8a-77c53eb34350\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; Bank reconciliation Bank reconciliation is the process of comparing a company\u2019s bank statement with their own financial records. The purpose of a bank reconciliation is to reconcile the differences in reporting between the bank and the company\u2019s own books. Typically, adjustments need to be made and noted on the company\u2019s end to account for [&hellip;]<\/p>\n","protected":false},"author":102,"featured_media":0,"template":"","meta":{"_sage_video":false,"footnotes":""},"tags":[],"class_list":["post-3245","sage_glossary","type-sage_glossary","status-publish","hentry"],"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice Canada English","distributor_original_site_url":"https:\/\/www.sage.com\/en-ca\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary\/3245","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary"}],"about":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/types\/sage_glossary"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/users\/102"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary\/3245\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media?parent=3245"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/tags?post=3245"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}