Reconcile Inter Company Transactions – A summary of the activity

Reconciliation is the process of keeping track of transactions that are posted in multiple finance books. The accounts are tallied periodically to avoid discrepancies while retrieving the statutory financial statements. Reconciliation of finance books is required:

• when receipts or payments for one company  is  made in other company,

•  when the purchase or sale of goods is made  between companies,

• when assets are transferred between companies,

• when surplus funds of one company is used in another  company of the group company and

• when expenses are incurred or revenue is gained due to transaction between two or more companies.

You can pass journal vouchers to rectify the discrepancies that are identified. Reconciliation of “Posting” finance books is mandatory before closing the financial calendar of a company.

This activity allows you to reconcile the account balances of finance books that are available in different companies. This activity also allows you to view the balances of the finance books after the reconciliation. You can also create journal vouchers that have to be passed for rectifying any discrepancy.

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