Reconciliation of accounts is the process of ensuring that two sets of financial records are in agreement. This typically involves comparing a company's internal records, such as its general ledger, with external statements, like bank statements, to identify any discrepancies. The goal is to confirm that all transactions are accurately recorded and that the balances match. This process is essential for maintaining accurate financial reporting and can help detect errors or fraudulent activities. Regular reconciliation helps businesses manage their finances effectively and ensures compliance with accounting standards, ultimately supporting better decision-making and financial health.