Which report is primarily used to compare the cash balance per the company's records with the cash balance per the bank statement, identifying any differences between the two?

• A. Budget Variance Report
• B. Income Statement
• C. Trial Balance
• D. Bank Reconciliation Statement

Answer: (D)

Verified step by step guidance

1. Understand the purpose of the Bank Reconciliation Statement: It is a report used to reconcile the cash balance recorded in the company's books with the cash balance shown on the bank statement, identifying discrepancies such as outstanding checks, deposits in transit, or bank errors.
2. Recognize the importance of this report: It ensures the accuracy of the cash balance in the company's financial records and helps detect any unauthorized transactions or errors.
3. Learn the key components of the Bank Reconciliation Statement: These include the company's book balance, the bank statement balance, adjustments for outstanding checks, deposits in transit, and any bank fees or errors.
4. Understand the process: Start with the cash balance per the bank statement, add deposits in transit, subtract outstanding checks, and adjust for any bank errors or fees to arrive at the adjusted bank balance. Then, compare this to the adjusted book balance.
5. Apply the concept: Use the Bank Reconciliation Statement regularly to maintain accurate financial records and ensure proper cash management within the company.