Question

Which of the following describes a difference between a bank reconciliation and a cutoff bank statement?

• A  : The bank prepares both documents, but auditors can request a bank reconciliation whereas clients must request a cutoff bank statement.

• B  : The bank prepares both documents, but auditors can request a cutoff bank statement whereas clients must request a bank reconciliation.

• C  : The client prepares the cutoff bank statement and the bank prepares the bank reconciliation.

• D  : The client prepares the bank reconciliation and the bank prepares the cutoff bank statement.

Answer 1

ANSWER: bank reconciliation is the statement preapred by the business(client) on a particular date ro reconcile the bank balances of cash book maintained by the business concern and passbook maintained by the bank.

cutoff bank statement is prepared by the bank which will be demanded by the auditors of busines concern to confirm the account balances with the bank cash balance. it is demanded by the auditor for a specific period usually related to the end of perid concerned.

actually there are many transactions which are setted by cheque, also transactions involved cancelation of cheque, dishonour, cheque pass on some other date other than date written on the cheque. So to reconcile this balances Auditor demand for the cutoff bank statement at the end of financial year.

so answer is D. the bank prepares the bank reconciliation and the bank preapres the cutoff bank statement.