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CA Foundation · Accounting · Bank Reconciliation Statement

Which of the following is a genuine benefit of regularly preparing a Bank Reconciliation Statement?

Regular preparation of a Bank Reconciliation Statement helps detect errors, omissions and possible fraud in the bank column of the cash book or in the bank's records, because two independent records are compared. It neither prevents future errors nor replaces the cash book.

  1. AIt guarantees that no errors can occur in the cash book in future
  2. BIt helps detect errors, omissions and fraud in the bank column of the cash book or in the bank's recordsCorrect
  3. CIt eliminates the need to maintain a cash book
  4. DIt automatically increases the bank balance of the business

Explanation

Reconciliation compares two independent records, so errors, omissions, unrecorded bank charges or fraudulent entries come to light. It cannot guarantee future accuracy, does not replace the cash book, and does not alter the actual bank balance.

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