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What is a Bank Statement?

A bank statement is a periodic summary issued by a bank showing every transaction — deposits, withdrawals, fees, and interest — in a business's account over a defined period, usually a month. It shows the opening balance, each transaction, and the closing balance. It is the primary document used for bank reconciliation.

A bank statement is the bank's version of what happened in your account. Your accounting system has its own version. When the two do not match — and they rarely match exactly — you perform a bank reconciliation: a process of explaining every difference (outstanding cheques, bank fees you have not recorded, deposits in transit) until the two balances agree.

Reconciling the bank statement each month is one of the most important bookkeeping controls. It catches errors (duplicate payments, missed transactions), detects fraud (unauthorised withdrawals), and ensures the cash balance on your books matches reality. Most accounting software now imports bank feeds automatically, but the reconciliation step — matching each transaction to a recorded entry — remains essential.

Example

A shop owner opens her monthly bank statement. Opening balance: €4,200. Deposits: €18,500. Withdrawals: €15,300. Bank fees: €35. Closing balance: €7,365. She reconciles this against her books, finds two unmapped bank fees, records them, and confirms the books match the statement.

Questions

How often should I reconcile my bank statement?

Monthly, as soon as the statement arrives. Delaying reconciliation means errors and fraud can go undetected for months. If you use accounting software with live bank feeds, reconcile weekly — it is faster and catches problems sooner.

Why does my bank balance not match my book balance?

Several reasons: deposits you have recorded but the bank has not processed yet, payments the bank has made that you have not recorded (fees, interest), outstanding cheques that have not cleared, and errors on either side. Bank reconciliation explains and corrects each difference.

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