What is the main purpose of preparing a bank reconciliation statement?
Correct answer: B. To explain differences between the cash book and bank statement
- A. To compare cash sales with credit sales
- B. To explain differences between the cash book and bank statement
- C. To calculate the total profit earned by the business
- D. To record all transactions in the purchases journal
Explanation
A bank reconciliation statement explains why the bank balance in the cash book differs from the balance shown by the bank statement. Timing differences and entries recorded by only one party commonly cause the difference.
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About Bank Reconciliation and Control Accounts
Bank reconciliation explains differences between the cash book and bank statement through unpresented cheques, outstanding deposits, bank charges, direct payments, credited amounts and recording errors. Control accounts summarise receivables and payables ledgers, and their balances are reconciled with individual accounts to locate discrepancies.
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34 free Bank Reconciliation and Control Accounts MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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More Bank Reconciliation and Control Accounts questions
A cheque issued by a business has not yet been presented to the bank for payment. How does this item usually affect the bank reconciliation?
A cheque deposited by a business has been entered in the cash book but has not yet been credited by the bank. What is the effect?
Bank charges appear on the bank statement but have not been entered in the cash book. What entry is required in the cash book?
A customer pays money directly into the business bank account, but the business has not yet recorded it in the cash book. What is the correct treatment?