Bank Reconciliation Statement — Account STD 11 Commerce — Question
CBSE BoardEnglish MediumSTD 11 CommerceAccountBank Reconciliation Statement1 Mark
Question
What is the purpose of preparing Bank Reconciliation Statement?
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Answer
Bank Reconciliation Statement is prepared for the following reasons:
To ensure that the amount of cash reported on the company’s balance sheet is the correct amount. The additions and deductions on the bank statement are compared with the items that are entered in the company’s general ledger cash account. If there are any differences made such as outstanding cheques and uncredited cheques, it will be noted as simply timing differences.
To detect the missing transactions which are not entered in the cash book.
To identify the data entry errors in a cash book.
To ensure that all transactions which have been recorded in your bank statements are accurate.
To identify the bank errors which is made by bank personnel.
To identify the dishonoured cheques.
To identify the stale cheques Cheque presented at the bank after six months of its payment date.
To detect frauds and the misappropriation of funds.
To ensure the financial review.
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