What is the primary purpose of bank reconciliation?

The primary purpose of bank reconciliation is to ensure that the company's financial records match the bank's records. This process involves comparing the transactions recorded in the company's books with those listed on the bank statement to identify any discrepancies. Reconciliation helps to catch errors, detect fraudulent transactions, and confirm that all transactions have been accurately recorded in both the company’s accounting system and the bank’s records. This accuracy is crucial for maintaining trust in financial reporting and cash flow management.

While other choices mention important financial processes—such as reporting expenses, preparing tax documents, or establishing creditworthiness—they do not directly address the core purpose of bank reconciliation itself, which revolves around aligning and verifying the records of both the bank and the company.