How do you reconcile a bank account?

To reconcile a bank account, it's crucial to compare your bank statement with your personal records, such as a checkbook or a digital ledger. This process involves checking each transaction listed on the bank statement against your own records to identify any discrepancies. Such discrepancies may include transactions you've recorded but that have not yet cleared the bank, errors in either your record-keeping or the bank's reporting, or unauthorized charges on your account.

By performing this comparison, you can ensure that the balance in your personal records aligns with the bank's balance, allowing you to catch mistakes and maintain accurate financial records. This practice not only helps in identifying minor errors but also aids in managing your finances effectively by ensuring that all transactions are accounted for accurately.