What does a bank reconciliation help identify?

A bank reconciliation is a process that compares and aligns an organization's cash records with the bank's records to identify any discrepancies. The primary purpose of this reconciliation is to ensure that the amounts recorded in the company's books match the balance reported by the bank on their statements. Discrepancies can arise due to various factors, such as outstanding checks that have not yet cleared, deposits that have not yet been processed by the bank, or errors that may have occurred in either the company's records or the bank's records.

By performing regular bank reconciliations, companies can detect any errors or unauthorized transactions, providing a clear and accurate view of the company’s actual cash position. This process is crucial for maintaining accurate financial records and ensuring proper cash management.

Other options, such as interest rates on savings accounts, changes in banking fees, or amounts of loans taken out, do not pertain directly to the reconciliation process. They relate more to the broader banking relationship and financial management rather than the specific activity of aligning cash balances.