What does it means by reconciling of accounts?

Reconciling an account often means proving or documenting that an account balance is correct. For example, we reconcile the balance in the general ledger account Cash in Checking to the balance shown on the bank statement. The objective is to report the correct amount in the general ledger account Cash in Checking. You will often need to adjust the general ledger account balance for items appearing on the bank statement that were not entered in the general ledger account.

Reconciling of accounts means to ensure that the book (accounting system) balances are accurate with the respective external source documents. Some of the examples of reconciliation items are as follows :-

1) Reconciling bank statement issued by bank against the book balances which might result in unpresented cheques and deposit not credited by bank.

2) Reconciling supplier statement issued by creditors against book balances which might result in payment made not updated by supplier or invoice received not taken up in the books/system

3) Reconciling term loan statement issued by financier against book balances which might result in interest expenses not taken up or payment amde not recorded by the financier.