Bank statements use terminology from the bank's point of view. When reconciling a bank statement, keep in mind that credits and debits on the statement reflect the bank's perspective, not the company's General Ledger.

For example, when a company deposits funds into its bank account:

• In the company's General Ledger, this is recorded as a debit to Cash (an increase in assets).
  
  
• On the bank statement, the same deposit appears as a credit, because from the bank’s perspective, the deposit increases the amount they owe to the account holder (a liability).
  
  

Understanding this difference is key when reconciling bank activity against the General Ledger.