The general ledger contains a record of a company’s cash transactions, and a bank statement tracks all money moving in and out of a company’s account. So, theoretically, these two statements should convey the same information and result in the same cash balances. However, in practice, this is rarely the case. Businesses of all sizes need to perform regular reviews, called bank reconciliations, to ensure that these two documents balance.
Good records will help you monitor the progress of your business, prepare your financial statements, identify sources of income, keep track of deductible expenses, keep track of your basis in property, prepare your tax returns, and support items reported on your tax returns.