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What is the use of reconciliation account in SAP FI Module?

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In SAP FI Module we have 3 types of Subsidiary ledgers maintained i.e. Accounts receivable, Accounts Payable and Asset Accounting. Each and every subsidiary ledger will have detailed transaction report. The subsidiary ledgers are connected to general ledger through an account called reconciliation account. When transactions posted into a subsidiary ledger the corresponding reconciliation account in the general ledger also got posted. Every transaction made in an account in the sub-ledger is automatically posted to the general ledger. This integration is guaranteed by the reconciliation account. A reconciliation account must be assigned to every customer account in the master record. This is done be entering the respective G/L account in the Reconciliation account field in the customer master record. When posting to the customer account, the reconciliation account has the following functions: The reconciliation account ensures that the total of all G/L account balances is always zero. This is a prerequisite for creating a balance sheet at any time. Therefore, it is no longer necessary to transfer account balances from sub-ledger to G/L accounts,

since the balances are updated automatically in the general ledger. Via the reconciliation account, the screen lay out for posting to the customer account can be determined. For example, the fields for entering hedging transactions for foreign currency can be suppressed, if such transactions are not carried out in a company. Further Via the reconciliation account, the currencies in which the corresponding customer account should be posted can be specified. Generally, a common reconciliation account is assigned to several customer accounts. The reconciliation account is displayed on the balance sheet under the balance sheet item Sundry Debtors. As many reconciliation accounts as required, can be created. Several reconciliation accounts are required only if one wants to display accounts separately on the balance sheet, such as domestic receivables and foreign receivables.

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