BUISENESS MANAGEMENT
RECORD KEEPING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It involves matching up records with the information on the bank statement
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It is not necessary to ensure the balance is correct
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It can help with understanding spending pattern
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It can help catch any mistakes or even fraud
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Detailed explanation-1: -But, it is not true for a bank reconciliation statement that the balance as per cash book and passbook are same as when the two balances are same, bank reconciliation statement is not required.
Detailed explanation-2: -Bank reconciliation statement is a report which compares the bank balance as per company’s accounting records with the balance stated in the bank statement. It is normal for a company’s bank balance as per the accounting records to differ from the balance as per bank statement due to timing differences.
Detailed explanation-3: -Therefore, updating omitted entries in the cash book is unrelated to the bank reconciliation procedure.
Detailed explanation-4: -General ledger: A general ledger is a record of all debits and credits for a company. It’s used in the bank reconciliation process to match transactions in the monthly bank statement.