Bank reconciliation statement is prepared to _________.

Reconcile bank balance as per pass book with balance as per cash book

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reconcile petty cash in hand with cash balance as per cash book

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reconcile total of debit side of cash book with credit side of bank pass book

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All the three

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Solution

The correct option is A Reconcile bank balance as per pass book with balance as per cash book
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 cause of difference thereof is ascertained. Businesses need to prepare the bank reconciliation statement for the following reasons:
1. To ascertain the balance reported by the company's cashbook is the correct amount.
2. To rectify any errors present in the cashbook. If theses errors are carried forward, it results in an incorrect income statement as well as incorrect balance sheet.
3. More control over the recordings in the cashbook.

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Similar questions

Q. A business firm periodically prepares a bank reconciliation statement to reconcile the bank balance as per the cash book with the pass book as these two show different balances for various reasons.

Q. ________ is a statement which is prepared as on a particular date to reconcile the bank balance as per cash book with balance as per pass book by showing all the causes of difference between the two.

Q. Bank balance as per pass book (Cr.) Rs.

40, 000

. A comparison of pass book and cash book revealed the following:
- Rs.

2, 360

was wrongly debited by bank.
- Transfer by bank to another account with no advice Rs.

10, 000

.
Balance as per cash book will be _______ .

Q. Bank balance as per cash book (Dr.) Rs.

10, 000

. A comparison of pass book and cash book revealed the following -
-Rs.

590

was wrongly debited by bank
-Transfer by bank to another account with no advice Rs.

2, 500

.
Balance as per pass book will be __________.

State whether the following Statements are True or False.

1) Bank Reconciliation Statement is prepared by Bank.
2) Bank Reconciliation Statement is prepared at the end of stipulated period.
3) Overdraft facility is allowed to proprietors personal account
4) Debit balance of Pass Book represents overdraft
5) Credit balance of Bank column of Cash Book represents the balance as per Cash book.
6) Bank charges debited by Bank increases bank balance in the Pass Book.
7) Interest credited in Pass Book is an income to the Customer.
8) Bank Reconciliation Statement is prepared to detect the errors the takes place in accounting

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