&Michael.T.Edwardes; &Michael.T.Edwardes.mail;
&Jack.H.Ostroff; &Jack.H.Ostroff.mail;
2024-12-01
5.2.0

# Reconciliation

## What is reconciliation?

Reconciliation is the process of assuring that your records for an account agree with the records of the institution for that account. This is done by matching the transactions you have entered into &kmymoney; with the transactions listed for that account by the institution. This is most commonly done with the list of transactions in a statement, be it a bank statement, credit card statement, loan statement, or any other statement. It can also be done against an on-line listing of the account, although this is less common. If any discrepancies are found, then either you or the person who created the statement have made a mistake.

Completing the reconciliation process for an account says that you are sure that the records for that account, up to the date of the reconciliation, are correct. This is most commonly done for accounts at institutions like banks or stores, but some users choose do to this for other accounts, such as cash. In that case, it means that you are sure of the records up to the reconciliation date, and are certain you will not find any further cash receipts, and that the balance of the account in &kmymoney; is the same as the actual amount of cash in your pocket.

Reconciliation is not required for any account, but by reconciling an account on a routine bases, such as monthly, you will have fewer records to examine if you do find a discrepancy.

## The reconciliation wizard

Note that as you progress through the reconciliation process, there are multiple possible paths for entering all the necessary data, especially if you need to find and correct some discrepancy between &kmymoney; and the statement. All are valid, and one is not any better than another. Over time, as with many activities within &kmymoney; you will find the way that best meets your needs and approach to managing your finances.

To reconcile an account, select the account in the Accounts or Institutions View, or display it in the register, then click the reconcile icon, select the Account Reconcile... menu item, or use the &Ctrl;&Shift;R shortcut.

This will open the reconciliation wizard. The first page of the wizard briefly describes the process you will follow. Click Next to actually start the wizard.

reconciliation wizard intro
reconciliation wizard intro

### Statement details

The initial statement date presented by &kmymoney; is typically 30 days after the more recent reconciliation for that account. The starting balance presented is the final balance as of the previous reconciliation. This is actually calculated as the sum of the amounts of all transactions in the account which are cleared or reconciled, up to the date of the previous reconciliation. The ending balance presented is the starting balance plus the amounts (added for deposits and subtracted for withdrawals) for all cleared transactions for the account since the previous reconciliation. (This also includes cleared transactions prior to the date of the previous reconciliation.) If the starting balance does not match the statement, then you need to confirm that the previous reconciliation was done correctly.

Theoretically, the ending balance at the time of the previous reconciliation should not be different from the starting balance at this time. However, &kmymoney; does not prevent you from making changes to transactions prior to the most recent reconciliation. Edits of this type are the usual cause of such discrepancies. At some point, &kmymoney; will probably be enhanced to make it much more obvious to the user if such an edit is made.

The statement date, starting balance, and ending balance can be found in your statement. Make sure that the figures match and click Next. If the starting balance does not match, see the previous paragraphs. If the statement date or ending balance does not match then enter the figures as listed on your statement and click Next.

reconciliation wizard starting information
reconciliation wizard starting information

### Interest

If you are reconciling a bank account or any account with interest and/or charges or fees, then enter these values in the appropriate fields. Both fields are optional, but if they are used, then a category must be assigned for each amount entered. Note that these amounts may have already been entered if you import transactions either directly or via a downloaded file, in which case you should not enter them again here, or you will have duplicate transaction.

Interest or Charge

The interest field is for interest you gained. If you have to pay interest, ⪚, for a credit card account, this should be entered as a charge. In both cases, you get to choose the proper category for the amount.

reconciliation wizard interest and charges
reconciliation wizard interest and charges

Click Continue to start matching your statement to what you have entered. Note that this completes the Reconciliation Wizard, but not the process of reconciliation. At this point, &kmymoney; displays the Ledgers View for this account, but it changes the ledger display in two ways. First, it only shows transactions that have not already been marked as reconciled. Second, the line below the main ledger display shows the Ending Balance from the statement on the left, the cleared balance of the account in the center, and the difference between then on the right. As described below, you still need to clear transactions and then tell &kmymoney; that the account is reconciled.

### Clearing transactions

During the reconciliation, any transaction can be edited to make it match the statement, and new transactions can be created as usual. To mark a transaction as cleared, click the C column of the transaction in the ledger. You can also select the Transactions menu or right-click the transaction to bring up the "Transaction options" context menu, and then select &Ctrl; &Alt; &Space; Mark transaction as... Cleared ; A transaction is considered cleared when it matches the transaction on your statement.

As you mark transactions as cleared, the Cleared and Difference amounts shown below the ledger will be updated.

Note, however, that as reconciliation is the process of matching the data in your account with that on a statement, the Cleared amount shown below the ledger is the cleared amount as of the date of the statement. Changes to any transaction with a date after the statement date you entered in the wizard will be saved, but will not have any effect on the cleared amount shown below the ledger display.

ledger during reconciliation
ledger during reconciliation

### Completing Reconciliation

#### Finishing Reconciliation

When the difference between the statement and the cleared balance is zero, then the account is reconciled and you can click Finish. When you do this, &kmymoney; takes all the transactions which have been marked as cleared (only those with a date before the statement date) and marks them as reconciled, and the value in the C column changes from C to R. In addition, it saves the changes and records that the account has been reconciled. (You still need to save the file to permanently save all the changes.)

#### The Reconciliation Report

The last thing the reconciliation wizard does it to present a report, in the form of a pop-up with two tabs.

##### Summary Tab

This tab shows a summary of the reconciliation, including the starting and ending balances, and the number and amount of payments and deposits: cleared, outstanding, and those after the reconciliation date.

##### Details Tab

This tab shows a list of outstanding payments and charges. These are unmarked transactions prior to the statement date of the reconciliation.

#### Postponing Reconciliation

If you're having trouble completing the reconciliation, or you need to gather additional information before you can complete the process, you can postpone the process to a later time by clicking Postpone. When you do this, &kmymoney; remembers the values you entered when you started the wizard, it does not mark cleared transactions as reconciled, and it returns the ledger to its normal view. If you exit &kmymoney; before clicking either Finish or Postpone, it has the same effect as clicking Postpone. Any edits you have made, such as marking transactions cleared or entering new transactions, are not touched, and you can still save them before you exit &kmymoney;. However, you will have to run the reconciliation wizard again in order to reconcile the account.

If you do click Postpone, the next time you run the reconciliation wizard on this account, &kmymoney; remembers the values you entered when you previously ran the wizard, and you will be able to change them, if necessary. In this case, the initial screen of the wizard is different, to remind you of this.

reconciliation wizard finish
reconciliation; wizard finish