Reconciliation Statements

Introduction

Now-a-days, every business entity is having large number of financial transactions due to the dynamic economic environment. An accountant while doing its function, undertakes utmost care in recording business transactions, despite such care, there may be chances of omissions, errors and misrepresentations in the books of accounts.

In order to have true and correct picture of the business affairs, an accountant has the tools to overcome such errors and omissions in the form of reconciliation statements.

For the purpose of verifying entries recorded in various books, we need to prepare reconciliation statements. In simple terms, reconciliation statements refer to the statements prepared with a specific object at a particular point of time by an accountant.

Types of Reconciliation Statements

Reconciliation statements are of four types:

1. Bank reconciliation statement

2. Receivables reconciliation statement

3. Payables reconciliation statement

4. Stock reconciliation statement