What is the need and purpose of preparing a bank reconciliation statement?
Asked by Topperlearning User | 15th Jul, 2016, 04:31: PM
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
- Explain in brief the reason for the difference caused by “cheques paid into the bank but not yet collected” with an example.
- What is bank reconciliation statement and why is it prepared?
- Explain the causes/reasons for the disagreement between the cash book balance and the passbook balance.
- Explain briefly 4 reasons for disagreement between the cash book balance and the passbook balance caused because of time gap.
- Give two examples of errors committed by the firm in recording transactions in the cash book.
- Give two examples of errors committed by the bank in recording transactions in the passbook.
- List 4 items having an effect of higher balance in the passbook.
- List 4 items having an effect of higher balance in the cash book.
- What is debit balance and credit balance as per cash book and bank pass book?
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