In payroll reconciliation, which documents are compared to verify accuracy?

• A. It is checked against the payroll register and tax filings to verify accuracy.
• B. It is compared with bank reconciliations to verify cash flow.
• C. It is only used for year-end reporting.
• D. It is used to determine employee vacation accruals.

Answer: (B)

Payroll reconciliation centers on confirming that the money paid for wages actually leaves the company in line with the payroll records. The key way to do this is by comparing the payroll activity to the bank reconciliations—the bank statements and the company’s cash records that show which outflows for payroll have actually cleared. When the payroll figures (gross wages, withholdings, employer taxes, net pay) are tracked in the payroll system, those same outflows should appear in the bank reconciliation as cleared checks or electronic payments. This cross-check verifies cash flow, ensures the funds were disbursed correctly, and helps uncover discrepancies such as mispostings, timing differences, or unauthorized payments. Other payroll tasks, like year-end reporting or calculating vacation accruals, are important but do not directly verify the actual cash movement in the same way that bank reconciliations do.