Statement showing the causes of disagreement between the balance of cash book & pass book is known as _____________.
A
Bank Reconciliation Statement
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B
Statement of Balance sheet
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C
Statement of profit & loss
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D
All of the above
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Solution
The correct option is B Bank Reconciliation Statement Bank reconciliation statement is a statement prepared by the account holder on a particular date to reconcile the bank balance as per cash book with the balance as per bank pass book or bank statement showing entries causing differences between the two balances.
Bank reconciliation statement is prepared due to following reason:
1. It brings to light errors that may have committed either in the cash bookn or pass book.
2. Undue delay in the clearance of cheques deposited is known from the reconciliation.
3. Reconciliation helps the management to verify the accuracy of entries recorded in the cash book.