"True up" is a financial term that refers to the process of reconciling and adjusting any discrepancies or differences between two or more related accounts or records. It is commonly used in the context of balancing financial statements, ensuring accuracy and alignment of figures and amounts.
The term "true up" often arises when comparing estimated or provisional figures to final or actual values. When preliminary amounts are used, such as budgeted or projected numbers, a true-up is necessary to correct any discrepancies and bring the figures in line with the final or precise values. This adjustment may involve updating or revising the estimated figures based on the actual data or ensuring that all expenses, revenues, or obligations are accurately recorded.
True up is crucial for maintaining financial integrity and providing an accurate representation of the financial situation. It serves to ensure that all accounts are accurately reflecting the financial activity and are consistent across different records or systems. By adjusting and aligning the figures, the true-up process ensures that financial statements, including balance sheets, income statements, or cash flow statements, provide a true and fair view of the financial position and performance of an entity.
Overall, "true up" is a fundamental process in financial management to reconcile and align financial accounts, statements, or records to ensure accuracy, consistency, and transparency.
