A Bank Reconciliation Statement is :a)A part of Pass Bookb)A statement...
A Bank Reconciliation Statement is a statement prepared by the customer to reconcile the balance as per the bank statement with the balance as per the cash book. It helps in identifying any discrepancies or differences between the two balances.
The Bank Reconciliation Statement includes various items such as:
1. Outstanding Checks:
- These are the checks issued by the customer but not yet presented for payment to the bank.
- These checks are deducted from the balance as per the cash book to arrive at the adjusted balance.
2. Deposits in Transit:
- These are the deposits made by the customer but not yet credited by the bank.
- These deposits are added to the balance as per the cash book to arrive at the adjusted balance.
3. Bank Charges and Interest:
- These are the charges levied by the bank for various services and the interest earned on the customer's account.
- These charges and interest are added or deducted from the balance as per the cash book to arrive at the adjusted balance.
4. Errors:
- Sometimes, errors may occur in recording transactions in either the cash book or the bank statement.
- These errors need to be identified and rectified to reconcile the balances.
The Bank Reconciliation Statement is prepared by the customer because:
- The customer has access to all the necessary information related to outstanding checks, deposits in transit, and other transactions.
- The customer is responsible for maintaining the cash book and ensuring its accuracy.
- The bank statement provides information about transactions processed by the bank, but it may not include all the transactions recorded in the cash book.
By preparing the Bank Reconciliation Statement, the customer can ensure that the balance as per the cash book is adjusted for any outstanding items or errors, leading to an accurate reconciliation with the balance as per the bank statement.
In conclusion, a Bank Reconciliation Statement is a statement prepared by the customer to reconcile the balance as per the bank statement with the balance as per the cash book. It includes various items such as outstanding checks, deposits in transit, bank charges, interest, and errors. The customer prepares this statement as they have access to all the necessary information and are responsible for maintaining the accuracy of the cash book.
A Bank Reconciliation Statement is :a)A part of Pass Bookb)A statement...
Because of a difference in cash book balance and pass book balance
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