Bank reconciliation is the process of comparing a company's records of its own financial transactions to the records of those transactions as recorded by its bank. The purpose of bank reconciliation is to identify and resolve any differences between the two sets of records.

In a bank reconciliation, a company compares its own records of cash transactions, such as deposits and withdrawals, to the records of those transactions as recorded by the bank. Any discrepancies, such as differences in amounts or timing of transactions, must be explained and resolved.

For example, if a company's records show that it made a deposit of $10,000, but the bank's records show that the deposit was only for $9,000, the company must determine the reason for the difference and correct its records if necessary.

Bank reconciliation is an important tool for maintaining accurate financial records and for detecting and preventing fraud or errors. It also helps a company ensure that its own records are in agreement with the bank's records, which is important for tax purposes and for securing loans or other financing.

In summary, bank reconciliation is the process of comparing a company's records of its own financial transactions to the records of those transactions as recorded by its bank. The purpose of bank reconciliation is to identify and resolve any differences between the two sets of records, maintain accurate financial records, detect and prevent fraud or errors, and ensure that the company's records are in agreement with the bank's records.