Question

Bank reconciliation is prepared by _________.

• A. Sole Proprietor concern
• B. Partnership firm
• C. Corporate bodies
• D. All the three

Answer 1

Answer: (D)

All the three

A Bank Reconciliation Statement is a statement prepared to reconcile/tally the differences that appear between the bank statement or passbook and the firm's cashbook so that the difference thereof is ascertained. Bank reconciliation is prepared by sole proprietor concern, partnership firm and corporate bodies as all the businesses bank reconciliation statement for the following reasons:

1. To ascertain the balance reported by the company's cashbook is the correct amount.

2. Any errors made by the bank are discovered and corrective measures are taken.

3. Discover dishonoured checks and take corrective measures.

4. To rectify any errors present in the cashbook. If these errors are carried forward, it results in an incorrect income statement as well as incorrect balance sheet.