The bookkeeper performs a bank reconciliation at the end of the accounting period (often the end of the month for high-traffic accounts). Why? What does a bank reconciliation accomplish?

Throughout the course of a period, transactions are posted with money going in and out of the bank account. It may seem like, if the bookkeeper is fastidious, that the bank account balance and the book balance will be identical. Why is that not often the case?

For starters, no one is perfect. It’s possible that an entry could be posted multiple times, missed entirely, or posted to the wrong account.

Even if the bookkeeper has recorded everything faithfully and not transposed any numbers at all, there’s more that needs to be recorded than what the company is responsible for. Many banks have service charges — and if you’re lucky enough to have a bank that doesn’t charge random fees, you’re still going to have to record interest.

Then of course, there’s the possibility that a client’s check bounces, or (heaven forbid) that the company itself writes a check that it doesn’t have the funds for. Further, if the company issues a check to a client, they have no way of knowing when the client is going to deposit the check.

There are many reasons that the book balance won’t perfectly match the bank balance, so periodic reconciliations are imperative to ensure the company knows how much money they’re actually working with.