Before moving on to parental guidance on the need and importance of the bank reconciliation statements homework answers one has to have knowledge on the very topic that is bank reconciliation statements.
What is bank reconciliation statement?
The bank reconciliation statement is a statement that summarizes the activities that have been carried out between the bank and an organization according to the records of the two, that is, both the bank and the organization.
The records concerned is the financial records of the two party which includes any kind of financial activities like the withdrawal of cash, or cash deposits as well as other activities that have an effect on the bank account.
These activities are checked for a certain fixed interval of time. That is, in another word, bank reconciliation occurs at a fixed interval of time period depending on the organization.
What is the purpose of bank reconciliation statements?
- The bank reconciliation statement is used as a weapon to prevent any kind of financial fraud that the organization may come across.
- The bank reconciliation statements make sure that all the monetary payments have been done as well as the cash that has been collected has been deposited in the bank account.
- Bank reconciliation statement tallies the record in the accounts book and the bank statements and points out the certain differences that may arise due to several reasons.
- It helps in adjusting the differences between the two books and as therefore making the two accounts clear off any differences.
What is the information needed to create bank reconciliation statements?
In order to create bank reconciliation statements, several records are needed. These include the bank statement of the current month as well as the bank statement of the month before that. The closing balance of the accounts is also required in order to create the bank reconciliation statement.
The transactions of the day of creation of the bank reconciliation statements are not taken into account while creating the statement. Those are considered in the next statement. So what the accountant does is consider all the transactions that have taken place until the previous day of the creation of the bank reconciliation statement that is, on the statement date.
How is it actually done?
What the accountant does in order to reconcile is just adjust the closing balances of the bank statements. Sometimes it may occur that the transaction is still under process as a result of which the recipient still has not received the cash. Thus a difference in both the statement may occur.
Sometimes some cash may be transferred to the bank but the bank may not have received it, and thus this transaction may not show up in the bankâ€™s respective statements. Since transaction is a matter of time, therefore error may occur if both the statement of the bank and the organization are tallied with each other.
Sometimes differences may occur between the two records because interest earned by the organization may not be calculated in its accounts book. This leads to a mismatch as a certain amount of interest is deposited by the bank to the recipientâ€™s account.
Often during bank reconciliation, the fees that are collected by the bank automatically may not be recorded by the organization as they are unaware of this change in balance most of the time. This again creates a mismatch between the two.
Need and importance of the bank reconciliation statements homework answers
Since bank reconciliation is a very important topic in the field of accounts, students need to have knowledge about the meaning and purpose of bank reconciliation statements. Parents must understand that missing out on a topic like this will hamper their childâ€™s academic.
Bank reconciliation is a subject that should be understood by everyone in order to fetch good grades in exams. The need and importance of the bank reconciliation statements homework answers should be taken into account while mastering the fields of finance. Here I am going to explain a simple way of getting bank reconciliation homework answers.
Understand importance of the bank reconciliation statements homework answers:
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