State the need for the preparation of bank reconciliation stateme…

Question

State the need for the preparation of bank reconciliation statement?

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Answer

The need to prepare Bank Reconciliation Statement are given below.

It helps in finding out the errors and omissions committed in the Cash Book and the Pass Book.
It shows uncleared cheques, which have already been debited in the Cash Book but have not been yet recorded in the Pass Book.
It helps in checking embezzlement of money from the bank account.
It helps in measuring the accuracy of the transactions recorded in the Cash Book.
It facilitates in preparing revised Cash Book that reflects true bank balance.

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Feb 1, 2017	Purchased from M/s Brown & Co. on credit.
	5 gross pencils @ ₹ 100 per gross.
	1 gross registers @ ₹ 200 per dozen.
	Less: 10% trade discount.
Feb 2, 2017	Purchased for cash from stationery Mart.
Feb 2, 2017	10 gross exercise books @ ₹ 60 per dozen.
Feb 6, 2017	Purchased from The Paper Co.
	5 reams of white paper @ ₹ 100 per ream
	10 reams of brown paper @ ₹ 65 per ream
	Less: trade discount @ 10%

Started business with cash ₹ 1,00,000.
Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000.
Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000 both at a profit of 20%.
Paid salaries ₹ 8,000.

2018
March 1	Sold to Vandna Electronics, Kolkata (West Bengal) Vide Invoice No. 1255
	50 Musical Alarm Clocks @ ₹ 800 each
	40 Wall Clocks @ ₹ 500 each
	Trade Discount 20%
March 10	Sold to Mohan Watch Company, Patna (Bihar) Vide Invoice No. 1256
	25 Deluxe Wall Clocks @ ₹ 800 each
	Trade Discount 10%
March 15	Sold to Superior Watch Company, Ranchi Vide Invoice No. 1257
	75 Deluxe Wall Clocks @ ₹ 800 each
	40 Super Deluxe Wall Clocks @ ₹ 1,000 each
	Trade Discount 15%
March 20	Sold to Modern Electronics, Ranchi Vide Cash Memo No. 5234 100% Musical Alarm Clocks @ ₹ 800 each Trade Discount 20%

S.no		₹
(i)	Gopinath started business with cash	25,000
(ii)	Purchased goods from Shyam	10,000
(iii)	Sold goods to Sohan costing ₹ 1,800	1,500
(iv)	Gopinath withdrew from business	5,000