What "Reconciled" Should Actually Mean
QuickBooks will tell you an account is reconciled. That proves the two sides agree. It doesn't prove either side is right.
QuickBooks will tell you an account is reconciled. That proves the two sides agree. It doesn’t prove either side is right.
How it balances to the wrong thing
When a reconciliation won’t come out, there’s always a way to force it. An adjustment for the leftover amount. A transaction marked cleared that didn’t clear. A plug to miscellaneous because it’s only $312 and the month needs to close.
Each one balances. None of them explains anything, and next month starts from a balance that already has something unsupported in it. Do that for a few years and you have an account that reconciled every month and still can’t be trusted.
What I check
The goal isn’t zero. It’s proving the balance matches something outside your books: the bank statement, the lender’s schedule, the payroll filings, what customers owe. When I review a reconciliation, I ask three things:
- What is the balance made of? The items, not the total.
- Can each item be supported? A statement, a schedule, a document.
- Should it still be there? A check outstanding for three years isn’t an outstanding check anymore.
If a bank account says reconciled and six old transactions are still hanging around, I want to know why.
Why it shows up late
Nothing breaks month to month. It shows up when a lender, a CPA, or a buyer asks for support, and the balance has to be reconstructed on a deadline. It’s the same work either way. The only choice is when you do it.