Need and Importance of Bank Reconciliation State

The statement prepared for its representatives by investigating the reasons for discrepancies in cash and passbooks is called Bank Reconciliation Statement. A bank reconciliation statement is prepared. To determine the correct cash balance of the busThe reasons corrects the cash balance as per journal entries by making journal entries.


Reconciliation of cash and bank book balances every month is controlled by cash. Understanding is the explanations behind the readiness of bank compromise proclamation:

1. To know the amount of bank deposit surplus at the end of all accounting periods,
2. To find out the reasons for discrepancies in the cash book and owner's book and bring it up to the authorities,
3. To satisfy the auditor as to the correctness of the bank balance at the end of the accounting period,
4. If there is any mistake while preparing the accounts in cash and passbook it is corrected while preparing the bank reconciliation statement and
5. For information on coordination web.

The preparation of bank reconciliation statements is not mandatory. The balance sheet should be equal to the bank balance and the amount shown in the bank statement. If there is a mismatch then a bank reconciliation statement needs to be prepared to show why the mismatch occurred.

The main reason for the mismatch between the cash book and the pass book is a time difference and lack of direct communication. An order has to be completed on behalf of the customer and the bank. Time differential constraints are created to complete this order. The reasons for discrepancies between the two balances are discussed below:
1. dishonored check,
2. Interim Term Deposit,
3. bounced check,
4. bank error,
5. Depositor's mistake,
6. bank charges,
7. Bank deposit interest etc.