What is the need and purpose of preparing a bank reconciliation statement?

Asked by Topperlearning User | 15th Jul, 2016, 04:31: PM

Expert Answer:

The need and importance of the bank reconciliation statement are

  • It ensures the accuracy of the balances and the records shown by the pass book and cash book.
  • It detects the errors which might have taken place in the cash book related to bank transactions and helps in rectifying the error.
  • Regular preparation of bank reconciliation statement helps in prevention of frauds.
  • It detects any undue delay which has been caused in recording of transactions/collection of cheques and action to be taken to thereof.
  • It provides a check on the accuracy of entries made in both the books.
  • It helps in updating the cash book as per the passbook.

Answered by  | 15th Jul, 2016, 06:31: PM