What is the purpose of conducting account reconciliation?

Conducting account reconciliation is primarily aimed at identifying errors and discrepancies in financial records. This process involves comparing and matching transactions recorded in accounting books to those listed in bank statements or other financial reports. By doing so, individuals or businesses can ensure that their financial records are accurate, complete, and reflective of true financial activity.

This practice helps in detecting mistakes such as duplicate entries, unauthorized transactions, or changes that may have occurred during the recording process. Ensuring accuracy in financial records is crucial for effective budgeting, financial planning, and maintaining trustworthiness in business transactions. Identifying discrepancies allows for timely corrections, which can prevent larger financial issues from developing later on.