Need and Importance of Bank reconciliation statement
‘Bank reconciliation statement is a list in which the various items that cause a dissimilarity between bank balance as per cash book and pass book on any given date are indicated’.
Need and Importance
After tracing the various items of dissimilarity, a bank reconciliation statement is organized. The following are its advantages in which lies its importance.
- The faults that might have taken consign in the cash book in connection with bank transactions can be simply found.
- It ensures the accuracy of the balances shown by the pass book and cash book.
- Regular research of bank reconciliation statement prevents frauds.
- It assists to maintained up to date records and tries to avoid delay in collection and payment.
- It indirectly imposes moral check on the accounting staff.
- Preparation of bank reconciliation helps in the identification of errors in the accounting records of the company or the bank.
- Bank reconciliation statement helps to update the cash book by discovering some entries not yet recorded.
- It assists to maintain healthy relation between banks its customers.