Course Content
New Accounting Model (Exam-2009)
Books references: 1. Account Code (Volume III). 2. Chart of Accounts (Issued by CGA). 3. Manual Accounting Principles. 4. Accounting Policies and Procedures Manual.
Private: DAO Part-I Examination 2024 (Fresh Candidates) Past Papers
About Lesson

Q. 4 Define Bank Reconciliation, highlight its benefits and show how it is carried out.

Answer: Bank Reconciliation:
  • Definition: Bank reconciliation is the process of comparing a company’s internal cash records (cash book) with the information on its bank statement. The goal is to identify differences and adjust accounting records as needed.
  • Benefits:
    • Accuracy: Ensures that recorded cash balances match actual bank balances.
    • Fraud Detection: Helps detect discrepancies, errors, or fraudulent activities.
    • Financial Reporting: Provides accurate financial statements.
    • Internal Controls: Strengthens internal controls over cash management.
  • Process:
    1. Compare Deposits and Checks: Match deposits and checks in the cash book with those on the bank statement.
    2. Adjust Bank Statement: Add deposits in transit, deduct outstanding checks, and account for bank errors.
    3. Adjust Company Cash Balance: Add interest earned, deduct bank fees, penalties, and NSF checks.
    4. Reconcile: Ensure the adjusted bank balance matches the company’s adjusted cash balance.
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