Can you explain what bank reconciliation is?

Bank reconciliation is the process of ensuring that the balances in an organization's accounting records match the balances reported by the bank. It involves comparing the company's cash ledger with the bank statement, identifying discrepancies such as outstanding checks, deposits in transit, bank fees, or errors, and making adjusting entries to reconcile the two records. The steps typically include: 1) Obtain the bank statement and the company's cash ledger; 2) Match each transaction on the bank statement to the ledger; 3) Identify any unmatched items and investigate their cause; 4) Record necessary adjustments (e.g., bank fees, interest, errors); 5) Recalculate the balances and confirm that the adjusted ledger balance equals the bank statement balance. This process helps maintain accurate financial records, detect fraud, and ensure timely reporting.