---
title: "What is reconciling item?"
description: "Reconciling Item explained in plain English: definition, how it works, an example, and how it appears in QuickBooks and Xero."
url: https://ledgerbpo.com/glossary/reconciling-item/
updated: 2026-09-11
publisher: LedgerBPO (SS Support Network LLC)
language: en-US
---

# What is reconciling item?

Glossary

A reconciling item is any transaction that appears on a bank statement but not yet in a company's books, or vice versa, and must be identified and explained before a bank reconciliation can be marked complete.

Updated September 2026

## How reconciling item works

Reconciling items fall into two directions: things the bank has recorded that the books have not yet caught up to, such as bank fees or interest earned, and things the books have recorded that have not yet cleared the bank, such as outstanding checks or deposits in transit. Each one needs a clear explanation before the reconciliation balances, since an unexplained difference between the bank and book balance means the reconciliation is not actually complete.

A bookkeeper works through the bank statement line by line, matching each transaction to the general ledger and flagging anything left over as a reconciling item. Items that stay open for more than a cycle or two, such as a check that never clears, get investigated separately since they can signal fraud, a lost payment, or a data entry error. A growing list of aged reconciling items is one of the clearest warning signs that a business's books need a deeper review.

## Example

At month-end, a company's book balance is $42,300 and the bank statement shows $41,850. The bookkeeper identifies two reconciling items: a $500 check written to a vendor that has not yet cleared the bank, and a $50 bank fee not yet recorded in the books. Adjusting for both brings the two balances into agreement at $41,800 net of the outstanding check.

## Reconciling item in QuickBooks Online vs Xero

QuickBooks Online's bank reconciliation tool flags unmatched transactions automatically and lists them as items still needing action before the reconciliation can be finished. Xero's reconciliation screen works similarly, showing a running difference until every reconciling item on both sides is matched, adjusted, or explained with a note.

## Common mistakes

- Forcing a reconciliation to balance with a plug entry instead of identifying every reconciling item individually, which hides the actual discrepancy somewhere in the books.
- Leaving reconciling items open for several months in a row, which lets a lost deposit, duplicate payment or fraud signal sit unnoticed until it grows into a larger problem.
- Treating every unmatched line the same way instead of separating timing differences, like an outstanding check, from genuine errors that need correcting, which slows down the review.

## Why it matters

A pile of unexplained reconciling items means the bank balance and book balance cannot actually be trusted to agree, which undermines every report built on top of them. For a small business owner, that uncertainty makes it harder to know true cash on hand before making payroll or a purchasing decision. Lenders and auditors also treat a clean, current reconciliation as basic proof the books are being managed properly.

## Related terms

- [Outstanding check](https://ledgerbpo.com/glossary/outstanding-check/)
- [Deposit in transit](https://ledgerbpo.com/glossary/deposit-in-transit/)
- [Bank reconciliation](https://ledgerbpo.com/glossary/bank-reconciliation/)
- [All terms](https://ledgerbpo.com/glossary/)

## How LedgerBPO handles reconciling item

We reconcile every bank and card account each month, working through every open reconciling item until the book balance and bank balance agree. Anything that stays unexplained, such as an old outstanding check, is flagged to you directly instead of being left open indefinitely.

[Every statement reconciled to the cent](https://ledgerbpo.com/services/bank-reconciliation/)

Next step

## Books closed. Invoices paid. Every month.

Tell us what is going on with your books or billing. You will hear from a named person within 1 business day, with a custom quote and a plan for the first close.

- Reply from a named person within 1 business day
- No setup fee, month-to-month
- Your software, your data, no lock-in

Start with a custom quote

[Get a custom quote](https://ledgerbpo.com/get-a-quote/) [Book a 20-minute call](https://ledgerbpo.com/book-a-call/) Or call [+1-657-777-0006](tel:+16577770006) during US, UK or Australian business hours.

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Source: https://ledgerbpo.com/glossary/reconciling-item/ · Contact: https://ledgerbpo.com/contact/ · Full site map for agents: https://ledgerbpo.com/llms.txt