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CSEET · Fundamentals of Accounting · Bank Reconciliation Statement

A Bank Reconciliation Statement is prepared by a business primarily to:

The main purpose of a Bank Reconciliation Statement is to explain the difference between the cash book bank balance and the passbook balance on a given date. It identifies the items causing the difference and does not replace either record.

  1. AReplace the cash book with the passbook as the main record
  2. BExplain the difference between the cash book balance and the passbook balance on a given dateCorrect
  3. CCalculate the profit earned by the bank on the firm's account
  4. DCorrect the bank's errors by altering the passbook entries

Explanation

A BRS reconciles the bank balance shown in the firm's cash book with the balance in the bank's passbook on a particular date, identifying the causes of difference. It does not replace the cash book, compute bank profit, or change the bank's records. Option 0 is wrong because the cash book remains the book of original entry.

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