Question

One of the purposes of bank reconciliation is to ensure that company's most important asset cash is being properly accounted for and maintained in the company's books.

Answer 1

Solution. A company operating business needs to prepare financial statements in order to reflect true financial position and to sustain. Monthly bank reconciliation ensures a company's most important asset cash is being properly accounted for and maintained in the company's books. This process encompasses comparison and verification of transactions with that of bank account summing ending balance to prevent errors and fraudulent activities in a company during an accounting period. It also facilitates in decision making by listing outstanding checks and interest earned.