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ABC Co. has issued a cheque to its suppliers for an amount of Rs. 10,000 but the accountant of the company by error has recorded the payment as Rs. 1,000 This error can be primarily identified on preparing ___________.
- a)Profit and Loss Account
- b)Trial Balance
- c)Bank Book
- d)Bank Reconciliation Statement
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
ABC Co. has issued a cheque to its suppliers for an amount of Rs. 10,0...
Bank Reconciliation Statement
Explanation:
Bank Reconciliation Statement is a statement prepared to reconcile the balance as per company's cash book with the balance as per bank statement. It helps in identifying the differences between the two balances and also helps in identifying any errors or omissions made in the cash book or bank statement.
In the given scenario, the accountant of ABC Co. has recorded the payment as Rs. 1,000 instead of Rs. 10,000. This error can be identified on preparing the Bank Reconciliation Statement as follows:
Step 1: Compare the closing balance as per cash book with the closing balance as per bank statement.
Step 2: Identify any differences between the two balances, such as uncleared cheques, deposits in transit, bank charges, interest earned, etc.
Step 3: Reconcile the differences by making necessary adjustments in the cash book or bank statement.
In this case, the error made by the accountant can be identified as a difference between the payment recorded in the cash book and the payment actually made by the bank. The correct amount of Rs. 10,000 should have been recorded in the cash book, but only Rs. 1,000 was recorded. This difference can be reconciled by adjusting the cash book balance with the correct amount of Rs. 10,000.
Therefore, it can be concluded that the error made by the accountant can be primarily identified on preparing the Bank Reconciliation Statement.
Explanation:
Bank Reconciliation Statement is a statement prepared to reconcile the balance as per company's cash book with the balance as per bank statement. It helps in identifying the differences between the two balances and also helps in identifying any errors or omissions made in the cash book or bank statement.
In the given scenario, the accountant of ABC Co. has recorded the payment as Rs. 1,000 instead of Rs. 10,000. This error can be identified on preparing the Bank Reconciliation Statement as follows:
Step 1: Compare the closing balance as per cash book with the closing balance as per bank statement.
Step 2: Identify any differences between the two balances, such as uncleared cheques, deposits in transit, bank charges, interest earned, etc.
Step 3: Reconcile the differences by making necessary adjustments in the cash book or bank statement.
In this case, the error made by the accountant can be identified as a difference between the payment recorded in the cash book and the payment actually made by the bank. The correct amount of Rs. 10,000 should have been recorded in the cash book, but only Rs. 1,000 was recorded. This difference can be reconciled by adjusting the cash book balance with the correct amount of Rs. 10,000.
Therefore, it can be concluded that the error made by the accountant can be primarily identified on preparing the Bank Reconciliation Statement.
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Community Answer
ABC Co. has issued a cheque to its suppliers for an amount of Rs. 10,0...
- The error of recording a payment of Rs. 10,000 as Rs. 1,000 will cause a discrepancy between the company's bank records and the bank statement.
- A Bank Reconciliation Statement is prepared to identify and reconcile such discrepancies between the bank book and the bank statement.
- By comparing the bank book with the bank statement, the error can be detected as the cheque issued for Rs. 10,000 will reflect differently in the bank statement, highlighting the recording mistake.
- A Bank Reconciliation Statement is prepared to identify and reconcile such discrepancies between the bank book and the bank statement.
- By comparing the bank book with the bank statement, the error can be detected as the cheque issued for Rs. 10,000 will reflect differently in the bank statement, highlighting the recording mistake.
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ABC Co. has issued a cheque to its suppliers for an amount of Rs. 10,000 but the accountant of the company by error has recorded the payment as Rs. 1,000 This error can be primarily identified on preparing ___________.a)Profit and Loss Accountb)Trial Balancec)Bank Bookd)Bank Reconciliation StatementCorrect answer is option 'D'. Can you explain this answer?
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