WHAT IS GL RECONCILIATION? WHAT YOU DO IN GL RECONCILIATION?
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Answer Posted / bade sirji
A reconciliation refers to the process of comparing records
of transactions for the period to actual transaction detail
that has been recorded.
Since data entry errors or other types of mistakes may
occur when information is entered from various sources.
It’s important to find them and make corrections after
certain time frame. Waiting until the end of the period /
year to research issues is not a good idea since there may
not be enough time to resolve discrepancies and process
correcting entries.
There are two types of financial data in common business –
1. Balance sheet which is consolidate statement of
financial position. This consist of Assets which are
resources owned by the business and are expected to benefit
future operations. Liabilities are debts represented in
future negative cash flow.
2. Income statement which is statement of activities.
Have Revenue which gives positive cash flow and Expenses
which gives negative cash flow.
Account reconciliations are an important component internal
control strategy which is specifically designed to reduce
risk and ensure the quality of financial statements.
Typically GL reconciliation follows double accounting
system meaning whenever you are debiting certain account
you should equally credit other account(s).
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