Importance of preparing bank reconciliation statement.

Bank reconciliation is analysis and adjustment of differences between the cash balance shown on a bank statement, and the amount shown in the account holder’s records. This matching process involves making allowances for checks issued but not yet presented, and for checks deposited but not yet cleared or credited. And, if discrepancies persist, finding the cause and bringing the records into agreement.

Analysis and adjustment of differences between the cash balance shown on a bank statement, and the amount shown in the account holder’s records. This matching process involves making allowances for checks issued but not yet presented, and for checks deposited but not yet cleared or credited. And, if discrepancies persist, finding the cause and bringing the records into agreement.

Analysis and adjustment of differences between the cash balance shown on a bank statement, and the amount shown in the account holder’s records. This matching process involves making allowances for checks issued but not yet presented, and for checks deposited but not yet cleared or credited. And, if discrepancies persist, finding the cause and bringing the records into agreement

Bank reconciliation is carried out for the following reasons:

  • To confirm the accuracy of entries in the cash book
  • To uncover any error that may have been made by the bank
  • To provide a reliable cash figure for the trial balance
  • To identify any items, such as bank charges, which need to be entered in accounting records, including the cash book

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