CAT / FIA FFA Syllabus E. Preparing A Trial Balance - Purpose of bank reconciliations - Notes ^{1 / 4}

We have already discussed the cash book as one of the main books of prime entry.

The cash book is used to record the detailed transactions of receipts and payments affecting the bank account.

These are then posted to the nominal ledger periodically.

At the end of each accounting period, the balance on the cash book should equal the balance in the nominal ledger cash/bank account.

As an extra control over the cash figure, it should be possible to agree this figure to an independent figure provided by the bank statement.

This is not always a straightforward agreement as there are many reasons why the two figures may not be exactly the same.

Therefore, we need to produce a reconciliation.

The aim of the reconciliation is to prove the

of cash receipts and payments.