What is the primary purpose of reconciling bank statements?

The primary purpose of reconciling bank statements is to ensure the accuracy of a bank account. When reconciliation is performed, it involves comparing the bank's records of transactions with the company's own records. This process helps identify any discrepancies that may exist, such as missing transactions, incorrect amounts, or even duplications. By keeping the bank account accurate, a business ensures that its financial statements reflect the true state of its accounts, which is essential for sound financial management and decision-making.

Maintaining accuracy also lays the groundwork for effective cash flow management, budgeting, and financial planning. While avoiding bank fees, tracking investment performance, and identifying fraudulent transactions are important aspects of financial management, they are secondary benefits that may arise from a thorough reconciliation process. The foundational goal remains ensuring the bank account's integrity and correctness.