Bank reconciliation is the process of comparing a company's financial records with its bank statement to ensure accuracy. This involves checking transactions, such as deposits and withdrawals, to confirm that both records match. Any discrepancies, like missing transactions or errors, are identified and corrected. The goal of bank reconciliation is to maintain accurate financial statements and ensure that the company's cash balance is correct. Regular reconciliation helps prevent fraud and errors, providing a clear picture of the company's financial health. It is an essential practice for effective financial management.