Difference between bank statement and ledger
A bank statement is the bank's record of your account. The ledger is your own record of the same account, so each can hold items the other does not have yet.
Why the two differ
- Deposits in transit: in your ledger, not yet credited by the bank.
- Outstanding cheques: in your ledger, not yet cashed.
- Bank fees and interest: on the statement, not yet in your ledger.
- Direct deposits: paid straight into the bank, not yet recorded.
- Mistakes: a wrong amount, a missing line or a duplicate.
Steps to close the gap
- Take the statement's ending balance and the ledger balance for the same date.
- Tick off the lines that appear on both sides.
- Record the statement-only lines (fees, interest, direct deposits) in the ledger.
- Keep the ledger-only lines (deposits in transit, outstanding cheques) on the list until the bank shows them.
- Anything left is an error: recheck amounts and look for duplicates.
Questions people ask
Is the general ledger the same as a bank statement?
No. The bank statement is the bank's record of the account. The general ledger holds your own record of the same account, so each can contain items the other does not yet have.
Why does my bank balance differ from my books?
The usual reasons are deposits in transit, outstanding cheques, bank fees or interest not yet recorded, direct deposits not yet recorded, and recording errors.
What is a deposit in transit?
A deposit recorded in your ledger that the bank had not yet credited when the statement was issued.
What is an outstanding cheque?
A cheque you have written and recorded that the payee has not yet cashed, so the bank balance is still higher than your books.
Related guides
- How to find unreconciled transactions in Xero
- QuickBooks bank reconciliation discrepancy
- Xero find duplicate transactions
Sources
Checked against the vendor's own help pages on 8 November 2026. Menu names and report layouts change between plans, regions and releases, so confirm them on your screen.
- UNC School of Government: The Bank Reconciliation, a key internal control (no publication date shown on the page)
- Xero Central: Delete or restore a bank statement line (Statement Balance and Balance in Xero)
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