Bank reconciliation is the process of proving that the ledger for one bank or card account agrees with the external statement for the same period. It is not the same as confirming that a feed is connected. A reconciled account has recorded the right activity once, used the right dates and amounts, and explained any difference that remains.
Difference? Explain timing, missing, or duplicate items before calling it reconciled.
Before you start
- Choose the exact bank or card account and the statement's beginning and ending dates.
- Record the statement ending balance exactly as printed; do not substitute a downloaded feed total.
- Confirm the ledger is scoped to the same account and entity.
- Gather statements, deposit details, checks, receipts, and loan or card records that explain timing.
Compare, then explain
Compare cleared deposits, payments, fees, transfers, and other rows to the ledger. A deposit in transit or uncleared check can be a legitimate timing difference. A missing bank row needs to be imported or recorded through the correct workflow. A repeated amount deserves a duplicate check before a second entry is created.
Transfers and duplicates deserve special attention
A $500 move from checking to savings should appear as cash leaving one account and arriving in the other, not as expense and income. If only one leg imported, find the counterpart rather than forcing the row into a category. For duplicate-looking rows, compare dates, descriptions, source identifiers, and statement occurrence before deciding whether there are actually two bank events.
Use review instead of hiding uncertainty
An unknown vendor, personal purchase, unmatched transfer, unusual loan payment, or possible CapEx item can remain in a review queue while the cash event stays visible. Reconciliation is stronger when it explains why a row is waiting than when it makes the difference disappear through a generic adjustment.
Close the period and read the reports
Once the account ties, retain the statement and reconciliation evidence. Then read the rental accounting cornerstone: the P&L explains activity over the period, while the Balance Sheet shows cash and liabilities at the ending date. A reconciled bank account supports both, but it does not make an incorrect category correct.
How often should a rental bank account be reconciled?
Monthly is a practical minimum for many portfolios. Active accounts may benefit from more frequent review; every period should end with an explainable balance.
What if the bank and ledger do not agree?
Check the account and date range first, then investigate missing activity, duplicates, timing differences, transfers, fees, and opening balances. Avoid an unexplained plug.
Does reconciliation prove my categories are correct?
No. Reconciliation proves the account activity agrees with the statement. Category and property decisions still need review and consistent accounting policy.