Describe a bank reconciliation and discuss its purpose.

Solutions

Expert Solution

Bank Reconciliation Statement

??It is a statement prepared for reconciling the balances of bank as per passbook and balances of bank as per cashbook?. This difference generally arises due to :

Unprocessed cheques ie cheque not cleared till date
Unpresented Cheques
Errors in Bank Statement / Cash Book, may be bank charges
Cash directly deposited in bank

Purpose of BRS

??Helps in identification of errors at correct time
Cash is the most important asset of a company, so BRS helps in putting controlling on that aspect
Regularly assist the flow of cash and bank balance
On preparing BRS, one gets satisfaction that accounting entries and books maintenance is going in the right and correct direction.

?One need to be careful as from which balance initiative is taken up ie Balance as per Passbook (Bank statement) or Balance as per Cashbook.

Note: as no word limit was mentioned, so answer is being made in crux, still if you have any query you are welcome!

ekkarill92 answered 10 months ago

Next > < Previous

Related Solutions

what is a bank reconciliation? what are the steps in preparing a bank reconciliation? what purpose...

what is a bank reconciliation? what are the steps in preparing a bank reconciliation? what purpose does it serve?

Items on a Bank Reconciliation Assume that a company is preparing a bank reconciliation for the...

Items on a Bank Reconciliation Assume that a company is preparing a bank reconciliation for the month of June. It reconciles the bank balance and the book balance to the correct balance. For each of the following items, indicate whether the item is an addition to the bank balance, an addition to the book balance, a deduction from the bank balance, a deduction from the book balance, or would not appear on the June reconciliation. Also, choose Yes or No...

Prepare bank reconciliation and related entries. AP The bank portion of the bank reconciliation for Katsaris...

Prepare bank reconciliation and related entries. AP The bank portion of the bank reconciliation for Katsaris Company at August 31, 2017, was as follows: KATSARIS COMPANYBank Reconciliation August 31, 2017 Cash balance per bank $13,229 Add: Deposits in transit 2,350 15,579 Less: Outstanding cheques #4451 $1,740 #4460 549 #4461 723 #4462 1,840 #4464 620 5,472 Adjusted cash balance per bank $10,107 The unadjusted cash balance per books on September 30, 2017, was $10,228. The September bank statement showed the following:...

Question What is bank reconciliation? What is the objectives of the bank reconciliation statement?

Describe and illustrate the use of a bank reconciliation in controlling cash, & Describe the Sarbanes-Oxley...

Describe and illustrate the use of a bank reconciliation in controlling cash, & Describe the Sarbanes-Oxley Act of 2002 and its impact on internal controls and financial reporting.

Preparing a bank reconciliation

Question Preparing a bank reconciliationThe Cash account of Guard Dog Security Systems reported a balance of $2,540 at December 31, 2018. There were outstanding checks totaling $400 and a December 31 deposit in transit of $100. The bank statement, which came from Park Cities Bank, listed the December 31 balance of $3,340. Included in the bank balance was a collection of $510 on account from Brendan Ballou, a Guard Dog customer who pays the bank directly. The bank statement also...

Bank Reconciliation The following bank reconciliation was prepared as of June 30, 20Y7: Poway Co. Bank...

Bank Reconciliation The following bank reconciliation was prepared as of June 30, 20Y7: Poway Co. Bank Reconciliation For the Month Ended June 30, 20Y7 Cash balance according to bank statement $16,185 Adjustments: Outstanding Check No.1067 $575 Outstanding Check No.1106 470 Outstanding Check No.1110 1,050 Outstanding Check No.1113 910 Deposit of June 30 not recorded by bank (6,600) Total adjustments (3,595) Adjusted balance $12,590 Cash balance according to company’s records $8,985 Adjustments: Proceeds of note collected by bank: Face value $6,000...

Bank Reconciliation The following information is available to assist you in preparing a bank reconciliation for...

Bank Reconciliation The following information is available to assist you in preparing a bank reconciliation for Calico Corners on May 31: The balance on the May 31 bank statement is $8,432.11. Not included on the bank statement is a $1,250 deposit made by Calico Corners late on May 31. A comparison between the canceled checks returned with the bank statement and the company records indicated that the following checks are outstanding at May 31: No. 123 $23.40 No. 127 145.00...

Classifying bank reconciliation items The following items could appear on a bank reconciliation:

Question Classifying bank reconciliation items The following items could appear on a bank reconciliation:a. Outstanding checks, $670.b. Deposits in transit, $1,500.c. NSF check from customer, no. 548, for $175.d. Bank collection of note receivable of $800, and interest of $80.e. Interest earned on bank balance, $20.f. Service charge, $10.g. The business credited Cash for $200. The correct amount was $2,000.h. The bank incorrectly decreased the business’s account by $350 for a check written by another business.Classify each item as (1)...

Q4. What is the bank reconciliation? why is it important for companies to prepare bank reconciliation...

Q4. What is the bank reconciliation? why is it important for companies to prepare bank reconciliation periodically?

Subjects