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CA Foundation · Accounting · Bank Reconciliation Statement

Which of the following best describes the main purpose of preparing a Bank Reconciliation Statement?

The main purpose of a Bank Reconciliation Statement is to explain the reasons for the difference between the balance in the bank column of the cash book and the balance in the pass book on a given date, helping detect errors and timing differences.

  1. ATo find out the profit earned by the business during the period
  2. BTo explain the reasons for the difference between the bank balance shown by the cash book and that shown by the pass book on a given dateCorrect
  3. CTo replace the cash book with the bank's own record of transactions
  4. DTo record all cash transactions of the business on a daily basis

Explanation

A BRS is a statement prepared on a particular date to identify and explain why the bank column of the cash book and the pass book show different balances. It does not compute profit, replace the cash book, or record daily cash transactions.

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