Account Reconciliation: Process and Worked Examples

General ledger reconciliation is broader than a bank check

A cash roll-forward can establish that opening cash plus recorded receipts less payments equals closing cash. That arithmetic cannot prove that a customer invoice was collectible, that an insurance policy remains active or that all obligations were recorded. Balance sheet account reconciliation asks what independently supports each ending balance.

For receivables, reconcile customer detail to the control account and investigate old or disputed amounts. For payables, compare supplier detail, statements and cutoff evidence. For equipment, support cost and accumulated depreciation with an asset register. The support and reviewer’s judgment must match the account, not just the layout of a worksheet.

Cash example: $1,445 supported at October 31

In the fictional check-register example used throughout these guides, opening cash is $1,000. Cleared activity is a $500 deposit, two distinct $100 payments and a $5 bank fee. A $200 deposit and $50 issued check remain pending at October 31 and clear afterward.

The bank statement is $1,295. Add the $200 deposit in transit and subtract the $50 outstanding check to support $1,445. The register before the fee is $1,450; debit Bank fee expense $5 and credit Cash $5 if that fee has not already been recorded. Corrected book cash is $1,445. Do not create new entries for the two timing items already recorded in the books.

Prepaid-expense example: $2,200 is not the bank balance

A separate fictional business, Rowan Services, has zero prepaid insurance at October 1. Policy POL-26 and paid invoice INS-26 establish $2,400 of coverage from October 1, 2026 through September 30, 2027. The example allocates the premium evenly over twelve months: $200 per month.

The purchase entry is debit Prepaid insurance $2,400 and credit Cash $2,400. At October 31, the supporting roll-forward is opening $0 + additions $2,400 - October expense $200 = $2,200. If the ledger still shows $2,400, approve debit Insurance expense $200 and credit Prepaid insurance $200. The adjusted ledger now agrees with eleven remaining months at $200.

The payment row proves that cash left, not the policy coverage dates or the monthly expense. Retain the policy, invoice, proof of payment, amortization schedule and journal reference. Cancellations, variable coverage and different allocation policies require their own assessment.

An exception log turns differences into actions

For cash, log CASH-01: unrecorded fee $5, owner bookkeeper, evidence October statement, due November 2, resolution journal FEE-10, status resolved after posting. Log CASH-02: pending deposit $200 and check $50, owner treasury preparer, due next statement review, resolution subsequent clearance evidence; no duplicate journal.

For prepaid insurance, log PRE-01: missing October expense $200, owner close preparer, due November 2, resolution journal PRE-10 linked to POL-26. A separate reviewer checks the dates, arithmetic and posting before sign-off. These roles and dates are fictional workflow examples, not a claim that an accountant has reviewed this article.

Do not conceal an unresolved difference

Retain the original ledger extract, the revised extract and the approval trail. A zero difference after an unsupported plug is not a reconciliation. If evidence is missing, state the amount at risk, age the item, set a follow-up date and escalate according to the business’s close policy rather than marking it resolved.

Use the account-reconciliation template for a noncash roll-forward and exception log, and the bank-reconciliation template for the detailed bank-side workflow. Fulla supplies reviewed statement transaction exports; it is not a balance-sheet reconciliation platform and does not obtain noncash supporting records or approve adjustments.