Question

Why is there typically a difference between the balance shown on a bank statement at the end of the month and the amount that is shown in a company's accounting records?

		because of timing differences such as outstanding checks and deposits in transit
		because of errors a company may have made in recording a transaction in its accounting records
		because of transactions that were recorded by the bank, that the company didn't know about until it received the bank statement
		All of the above are correct.

Answer 1

Solution is Option 4: All the above are correct

The difference between the balance shown on a bank statement at the end of the month and the amount shown in a company's accounting records is reconciled by preparing a Bank Reconciliation Statement.

Such a difference occurs because of many reasons, some of which are stated above: Because of the timing difference of the debit (outstadning checks) and credit (deposits in transit), the errors in recording the bank transactions, and the transations which generally happens directly at the bank like bank charges, etc.