Application of Bank Reconciliation Statement: Why Businesses Compare Their Cash Records
According to the business's accounting records, it has $75,000 in cash, but its bank statement indicates that it has $72,800 in cash. The difference at a first glance may lead one to believe that there is a mistake. Truth is, variations such as these are quite normal as transactions can often not be recorded at the same time, by both the business and the bank. This will be helped by the bank reconciliation. It will reconcile the company's cash books to the bank statement, check for any discrepancies and ensure the cash books are correct after making the proper adjustments. One of the easiest measures to enhance the financial control and minimize the risk of financial errors is to conduct a financial reconciliation regularly. What Is a Bank Reconciliation Statement? A bank reconciliation statement is a statement which shows a comparison of the balance of the cash book with the bank statement for the same period. The intent is not to update the bank's records, but to give ...