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What Is Bank Reconciliation Statement?

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Lily James Profile
Lily James answered

Bank Reconciliation statement is basically a statement that is prepared by organizations for reconciling the balance of cash at the bank, in its own record with the statement prepared by the bank on a specific date.

Bank Reconciliation statement is prepared because it ascertains that any discrepancy in the records is because of an error rather than the timing of the entry. All the errors and mistakes made either in the cash book or the books of the bank are revealed. It also indicates the delays in the clearance of the outstation cheques.
 
Another important purpose of preparing this statement is that it discourages the staff from committing any embezzlement.

Lily James Profile
Lily James answered

A Bank reconciliation statement allows a person to compare their personal bank account record with the bank record of his account. This is done so that any possible discrepancies are removed.

It is very important to prepare this statement. This is because there are time differences between the time when data is entered in bank system and when it is entered on the individual's system. This can create difference between account balance. Reconciliation statement determines whether the discrepancy is because of error or time difference.

Bilal Ahmad Profile
Bilal Ahmad answered
In business we keep our bank account in the cash book, as a part of the three column cash book, i.e. Bank account in the cash book means two bank columns on the both sides of two column or three column cash book. It is made up everyday, and we record in it (bank columns) all cheques received from our debtors and all cheques paid or issued to our creditors or suppliers. We shall also have several contra entries every month, recording excess cash paid in or cash drawn out when required for personal or office use. At the end of the month the cash book (bank column) balanced and the result is a bank balance, (as per cash book). Thus the cash book (bank columns) tells us, what our balance with the bank is on a particular date.    In the same way, the bank also keeps a record of our bank account with the title "depositor's account" and enters into our account everyday what is paid in and what is drawn out. At the end of any day the bank will gladly tell us our bank balance (as per bank record), so two reciprocal accounts are kept in bank account (cash book) in books of the depositor and depositor's account in books of the bank. The balance shown by the two accounts (bank A/c and depositor's A/c) should be equal because when the bank account is debited (bank column of cash book is debited), the depositor's A/c is credited in the bank books and vice versa.
Jan Bay Profile
Jan Bay answered
A bank reconciliation gives a realistic bank balance where the statement that your bank sends you at the end of each month may not show activities like checks or deposits that were made after the cutoff date. Bank reconciliations are a good way to doublecheck your own figures as well as the bank's.
R Maye Profile
R Maye answered
It's a ledger or accounting of your transactions: Debits, credits, transaction fees etc. It helps you to balance your account against what the bank has. There is a month end cut off that you need to keep in mind when balancing.
Anonymous Profile
Anonymous answered
The statement that provides the necessary information about the accounts maintained by both the parties that is the banker and the account holder who may be an individual or company.
Anonymous Profile
Anonymous answered
Bring to agreement your book and bank balance......any discrepancy, whether a cash shortage or overage will call attention,....a material cash shortage may be due to theft....while cash overage may be due to mistakes on giving customers change....
Anonymous Profile
Anonymous answered
In order to recognise the balance of the pass &cashbook a statement is prepared which indicate the reason of the difference between the 2 balances this statement is called  bank reconciliation

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