Legal Definitions - reconciliation statement

A reconciliation statement is a financial statement that is used to adjust discrepancies in accounting or financial records. It is a tool used to ensure that the records of an organization are accurate and complete.

Let's say that a company's bank statement shows a balance of $10,000, but the company's accounting records show a balance of $9,500. In this case, a reconciliation statement would be used to identify and adjust the discrepancies between the two records. The statement might show that there was an outstanding check for $500 that had not yet cleared the bank, which would explain the difference in the balances.

Another example could be a credit card statement that shows a balance of $1,000, but the company's records show a balance of $900. A reconciliation statement would be used to identify and adjust any discrepancies between the two records, such as a transaction that was not properly recorded in the company's accounting system.

These examples illustrate how a reconciliation statement is used to ensure that financial records are accurate and complete by identifying and adjusting any discrepancies that may exist.