Question

Bank reconciliation sometimes points to the need for adjusting entries. Invariably how should it be done?

• A. The reconciliation of the ending balance as per the bank statement to the adjusted cash balance.
• B. The reconciliation of the cash balance as per the company records to the adjusted cash balance.
• C. Both a and b
• D. None of the above

Answer 1

The correct option is A The reconciliation of the ending balance as per the bank statement to the adjusted cash balance.

Bank statement provides balance as on date. But to determine the exact balance available with the business, it is required for business to prepare bank reconciliation statement while making adjustments in the bank column of cash book.