ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Reconciling credit card account and merchant account statements with your company’s own financial records ensures accuracy in your accounting process and helps detect fraud. Discrepancies can occur on either side of the transaction.

Detailed explanation-2: -Bank reconciliations are an essential internal control tool and are necessary in preventing and detecting fraud. They also help identify accounting and bank errors by providing explanations of the differences between the accounting record’s cash balances and the bank balance position per the bank statement.

Detailed explanation-3: -Credit card reconciliation is the process by which accountants ensure that the transactions in a business’s credit card statement match its general ledger. For accurate and efficient financial reporting, companies need to know that these transactions took place and that the expenses on both sides are correct and valid.

Detailed explanation-4: -That kind of policing is not possible without routine checks on the balance of the account as well as investigation into any transactions that do not reconcile properly. In general, all businesses should do bank reconciliations at least once a month.