What is the primary purpose of a bank reconciliation?
A)To ensure that for all cash transactions debits equal credits.
B)To ensure that customers are paying amounts owed on a timely basis.
C)To ensure the bank balance per reconciliation is equal to the company balance per reconciliation.

Question

Quizplus · Accepted Answer

The primary purpose of a bank reconciliation is to ensure that the company's bank balance per reconciliation matches the company's balance per reconciliation. This is done by comparing the company's records of deposits, withdrawals, and other transactions with the bank statement for the same period, and identifying any differences or errors between the two. By reconciling the bank account regularly, a company can ensure the accuracy of its financial records and avoid overdrafts, bounced checks, or other problems caused by discrepancies between the company's records and the bank's records. Option A is incorrect because while it is important to ensure that debits equal credits, this is not the primary purpose of a bank reconciliation. Option B is also incorrect because while timely payment by customers is important, it is not directly related to the process of reconciling the bank account.

What Is the Primary Purpose of a Bank Reconciliation