A business example
The cashbook shows ₹50,000, while the bank statement shows ₹49,500. A ₹500 bank fee has not yet been entered in the books.
Compare
The two balances differ by ₹500.
Explain
The bank statement identifies an unrecorded ₹500 fee.
Correct
A supported fee entry brings the cashbook to ₹49,500.
What this shows
The records agree because the difference was explained and corrected. An unexplained balancing entry would conceal the cause instead.
What it is often confused with
Forcing balances to match without explaining differences can conceal errors.
What to look at in your business
Record each difference, its explanation and any correcting entry.
Context and further reading
This entry explains the business term. The related guide below provides the next layer of context; any applicable legal test depends on the transaction and relevant period.
Kosha.Services · Updated 2 October 2026