Question

In: Accounting

Describe a bank reconciliation and discuss its purpose.

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!


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