Question

Answer in one sentence only.

Why is Bank Reconciliation Statement prepared?

Answer 1

A Bank Reconciliation Statement is prepared to reconcile the difference between the bank balance as per the Cash Book and as per the Pass Book. Banking transactions are recorded in both the books i.e. Cash Book and the Pass Book. But due to certain reasons, such as direct deposits, recording of transactions at different point of time, etc., there arise a difference between the balances of both the books. So, in order to match the balances of both the books, a Bank Reconciliation Statement is prepared.