Bank reconciliation Statment...?

Question

What is a Bank reconciliation Statment and why would it be useful???

Answer 1

Often,when a comparison is made between the bank balance as shown in the firm’s cash book with that shown on the bank statement, the two balances will be different. It is for this reason that a bank reconciliation statement is prepared to reconcile (‘tally up’) the two balances. The reconciliation may identify errors that may have been made in either the firm’s cash book or in the bank’s records. Any corrections can then be made.

These differences are explained by a document known as a bank reconciliation statement: which lists

• items which are in the cash book but not on the bank statement

• items which are on the bank statement but not in the cash book

This process is an important one: it enables the business to update its cash book and also helps to prove the accuracy of the bookkeeping of the business and the bank.

The link gives you illustrations of bank recons.