Question

State the need for the preparation of bank reconciliation statement?

Answer 1

The need to prepare Bank Reconciliation Statement are given below.

1. It helps in finding out the errors and omissions committed in the Cash Book and the Pass Book.

2. It shows uncleared cheques, which have already been debited in the Cash Book but have not been yet recorded in the Pass Book.

3. It helps in checking embezzlement of money from the bank account.

4. It helps in measuring the accuracy of the transactions recorded in the Cash Book.

5. It facilitates in preparing revised Cash Book that reflects true bank balance.