What is bank statement reconciliation?
It is the process of matching the balances in an entity's accounting records with the corresponding information on a bank statement.
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Definition
What is bank statement reconciliation?
It is the process of matching the balances in an entity's accounting records with the corresponding information on a bank statement.
Why is bank reconciliation important?
It ensures the accuracy of financial records, helps identify discrepancies, and prevents fraud.
What is the first step in reconciling a bank statement?
The first step is to compare the opening balance on the bank statement with the opening balance in your records.
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What should you do if you find a discrepancy during reconciliation?
Investigate the discrepancy to determine its cause and make necessary adjustments to your records.
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What causes bank reconciliation discrepancies?
Outstanding checks, bank errors, and unrecorded transactions are common causes.
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How often should bank reconciliation be performed?
It should be performed regularly, typically monthly, to ensure ongoing accuracy of financial records.
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| Term | Definition |
|---|---|
What is bank statement reconciliation? | It is the process of matching the balances in an entity's accounting records with the corresponding information on a bank statement. |
Why is bank reconciliation important? | It ensures the accuracy of financial records, helps identify discrepancies, and prevents fraud. |
What is the first step in reconciling a bank statement? | The first step is to compare the opening balance on the bank statement with the opening balance in your records. |
What should you do if you find a discrepancy during reconciliation? | Investigate the discrepancy to determine its cause and make necessary adjustments to your records. |
What causes bank reconciliation discrepancies? | Outstanding checks, bank errors, and unrecorded transactions are common causes. |
How often should bank reconciliation be performed? | It should be performed regularly, typically monthly, to ensure ongoing accuracy of financial records. |
What is an outstanding check? | An outstanding check is a check that has been written and recorded in the financial records but has not yet cleared the bank. |
What is a bank error? | A bank error is a mistake made by the bank in recording transactions, such as incorrect amounts or missed entries. |
What is a deposit in transit? | A deposit in transit is a deposit that has been recorded in the company's books but not yet reflected in the bank statement. |
What should be done after completing a bank reconciliation? | After completing reconciliation, update your financial records to reflect any adjustments made during the process. |
What is the cash flow statement's primary purpose? | To show a company's cash inflows and outflows over a specific period, providing information about its ability to generate cash. |
What is the income statement's primary purpose? | To show a company's financial performance over a specific period, including its revenues, expenses, and profits. |
What is the balance sheet's primary purpose? | To show a company's financial position at a specific point in time, including its assets, liabilities, and equity. |