TAX Accountant Interview Question:

Please explain what is the significance of reconciliation in accounting?

Submitted by: Muhammad

Reconciliation is a must when it comes to accounting. One set of record should be matched/reconciled with another so that records are updated on timely basis. It also helps to verify if any incorrect entry/amount is posted in the books. Some basic types of reconciliations which are very essential are bank reconciliations (bank ledger in our books vis-a-vis bank statement), vendor reconciliation (vendor ledger in our books vis-a-vis our ledger in vendor's books), inter-company reconciliations, etc. Internal reconciliations should also be done. These include quantity reconciliation of closing stock, cost of goods sold reconciliations, etc.
Submitted by: Muhammad