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BigorU [14]
3 years ago
7

The preparation of a bank reconciliation is an important cash control procedure. If a company deposits cash receipts daily and m

akes all cash disbursements by check, explain why the cash balance per books might not agree with the cash balance shown on the bank statement. Identify specific ex
Business
1 answer:
castortr0y [4]3 years ago
8 0

Answer & Explanation :

Bank Reconciliation Statement is prepared to reconcile (match) the differences between bank balance as per cash book & bank balance as per pass book, at end of an accounting period.  

The differences may arise because of following reasons :

  • Errors committed by firm or bank
  • Cheques paid but not collected, upto the last date (added in cash book, but not in bank balance)
  • Cheques issued but not yet presented for payment, upto last date (subtracted in cash book, but not in bank balance)
  • Direct expenses & direct incomes settled by bank (done in bank balance, but not in cash book)

BRS involves starting with balance as per any book - cash book or passbook. Then, the adjustments for mismatch are done, to arrive at correct balance as per the other book.

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To break even the company must sell

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