What is the purpose of a bank reconciliation statement?

The purpose of a bank reconciliation statement is to compare bank records with a company’s financial records for accuracy. This process involves matching the transactions recorded in the company's accounting system with those reflected on the bank statement. By doing this, discrepancies between the two sets of records can be identified and resolved. This is vital for ensuring that the financial information is correct, which helps in maintaining accurate accounts and effective financial management.

In the context of bank reconciliation, it serves to confirm that the amounts the bank has recorded match those that the company has on their books. This includes checking deposits, withdrawals, bank fees, and errors that could arise in either record-keeping system. Ultimately, the reconciliation helps in identifying any discrepancies, such as outstanding checks or deposits in transit, ensuring all transactions are accounted for and providing a clearer picture of the financial situation.