Watch here video on Financial Accounting topic - bank reconciliation.
At the end of the accounting period it is necessary to compare Cash Book balance with the balance on the bank statement, clarify and explain difference if any.
Usually there will be a difference between these two balances. The process of explaining these differences in the financial accounting is called Bank Reconciliation.
There are two types of differences:
Informational - those which are not recorded in the Cash Book, but present in the bank statement. These differences cause adjustments in the Cash Book before Bank Reconciliation is prepared
Timing - those which are caused by diff rent timing in recording to the Cash Book and Bank Statement. No adjustments are made to the Cash Book, such differences are explained in the Bank Reconciliation.
Watch Financial Accounting - Bank Reconciliation video below:
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