How do you perform credit card reconciliations and ensure your credit card balance matches the card issuer?

• A. Reconcile the credit card account by matching charges and payments with statements; ensure the ending balance matches.
• B. Reconcile by only matching charges and ignore payments.
• C. Reconcile by comparing the current balance to the last statement only.
• D. Use a separate spreadsheet to track statements.

Answer: (A)

Credit card reconciliation is about making sure every charge, payment, and fee in your books matches what the card issuer billed, so the ending balance in your credit card liability account equals the issuer’s ending balance. In practice, you compare the card statement to the transactions in your ledger, and you confirm that each item—purchases, payments you’ve made, refunds, interest, and any fees—has a corresponding entry. You also account for timing differences, such as items that posted after the statement date, by including them in the reconciliation or marking them as outstanding if needed. The goal is to bring the two records into agreement and clearly show a zero difference.

This approach is best because it ensures the entire activity is captured, not just a portion of it. If you only match charges, you’ll miss payments and the balance won’t truly reflect what the issuer shows. If you compare just the current balance to the last statement, you could overlook items from the current cycle. Using a separate spreadsheet can help with tracking, but it won’t enforce alignment in your accounting system itself, so it won’t guarantee the balance matches the card issuer.

In practice, pull the statement, verify the ending balance, and go item by item to mark charges, payments, credits, and fees as reconciled. Add any missing transactions, correct discrepancies, and adjust until the ledger balance and the issuer’s balance are the same.