Bank Reconciliation StatementQ-2 | Bank Reconciliation StatementQuestion 4700 of 54
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Importance of bank reconciliation to an industrial unit. [RTP Jan 2025]

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A
B
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D
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Correct Answer

✅ Option — Correct Option

All Options:

  • A
  • B
  • C
  • D

Detailed Solution & Explanation

Banks are essential to modern society, but for an industrial unit, it serves as a necessary instrument in the commercial world. Most of the transactions of the business are done through bank whether it is a receipt or payment. Rather, it is legally necessary to operate the transactions through bank after a certain limit. All the transactions, which have been operated through bank, if not verified properly, the industrial unit may not be sure about its liquidity position in the bank on a particular date. There may be some cheques which have been issued, but not presented for payment, as well as there may be some deposits which has been deposited in the bank, but not collected or credited so far. Some expenses might have been debited or bills might have been dishonoured. It is not known to the industrial unit in time, it may lead to wrong conclusions. The errors committed by bank may not be known without preparing bank reconciliation statement. Preparation of bank reconciliation statement prevents the chances of en1bezzlement. Hence, bank reconciliation statement is very important and is a necessity of an industrial unit as it plays a key role in the liquidity control of the industry.

More Questions from Bank Reconciliation Statement

Pass the necessary Journal entries to rectify the following errors, using a Suspense Account: (i) Goods of the value of 500 returned by Mr. A were entered in the Sales Day Book and posted there from to the credit of his account; (ii) 250 entered in the Sales Returns Book, has been posted to the debit of Mr. R, who returned the goods; (iii) A sale of 700 made to Mr. Q was correctly entered in the Sales Day Book but wrongly posted to the debit of Mr. S as 70; (iv) The total of "Discount allowed" Column in the Cash Book for September amounting to 350 was not posted. [Sept. 2024, 4 Marks]

Meaning of Bank Reconciliation Statement.

The interest charged by Banker to customer on overdrawn account is called Red ink interest.

Bank reconciliation statement is prepared to arrive at the bank balance.

Interest charged by the bank will be deducted, when the overdraft as per the cash book is the starting point for making the bank reconciliation statement.

If the balance as per cash book and pass book are the same, there is no need to prepare a reconciliation statement.

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