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Basic understanding about Bank Reconciliation Statements.
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ALL ABOUT BANK RECONCLIATION STATEMENTMADE BY- VAIBHAV GAUTAM
1. WHAT IS BANK RECONCLIATION STATEMENT Let’s start with the first set of slides
WHAT IS A BANK RECONCLIATION STATEMENT • A bank reconciliation statement is a document that compares the cash balance on a company’s balance sheet to the corresponding amount on its bank statement. Reconciling the two accounts helps identify whether accounting changes are needed. Bank reconciliations are completed at regular intervals to ensure that the company’s cash records are correct. They also help detect fraud and any cash manipulations.
WHY TO PREPARE A BANK RECONCLIATION STATEMENT • It‘s not compulsory to prepare a BRS and there’s no fixed date for preparing BRS. • BRS is prepared on a periodical basis for checking that bank related transactions are recorded properly in the cash book’s bank column and also by the bank in their books. BRS helps to detect errors in recording transactions and determining the exact bank balance as on a specified date.
BENEFIT OF PREPARING BANK RECONCLIATION STATEMENT • Detecting errors: A bank reconciliation helps you in spotting accounting errors that are common to every business. These mistakes include errors such as addition and subtraction, missed payments and double payments.
CONTNUTION • Tracking Interest and Fee: Banks might add interest payments, fees or penalties to your account. Monthly bank reconciliation allows you to add or subtract such amounts in your books. • Tracking Receivables: BRS allows you to confirm all your receipts, assisting you to avoid awkward situations and also identifying entries for receipts that you didn’t deposit