Bank reconciliations are used to compare the bank account as recorded in the business's' general ledger against the bank's records of the bank account. The reconciliation highlights any timing differences between the two records along with any discrepancies such as errors and omissions. These are investigated and any necessary corrections made in the general ledger as appropriate. If an error has been made by the bank, then the business communicates this to the bank.
When the cash at bank general ledger account has been updated, the bank reconciliation statement is prepared to reconcile the closing balances in the cash at bank general ledger account and the bank statement. It is usually necessary to include any unpresented cheques and outstanding lodgements in the reconciliation statement.
Supplier statement reconciliations are similar in nature to a bank reconciliation. They help to provide assurance that the payables ledger balance for that supplier is stated fairly as at the date of the reconciliation. As with a bank reconciliation, it may be necessary to update the general ledger and the memorandum payable ledger account if they contain errors or omissions.