Bank Reconciliation Statement is prepared so that the.......................................... can be reconciled.

Difference in pass book and cash book balance

The correct answer is option 3- Difference in pass book and cash book balance.

It is generally experienced that when a comparison is made between the bank balance as shown in the firm’s cash book, the two balances do not tally. Hence, we have to first ascertain the causes of difference thereof and then reflect them in a statement called Bank Reconciliation Statement to reconcile (tally) the two balances. In order to prepare a bank reconciliation statement we need to have a bank balance as per the cash book and a bank statement as on a particular day along with details of both the books. If the two balances differ, the entries in both the books are compared and the items on account of which the difference has arisen are ascertained with the respective amounts involved so that the bank reconciliation statement may be prepared. Thus,  Bank Reconciliation Statement is a statement prepared to reconcile the bank balance as per cash book with the balance as per passbook or bank statement, by showing the items of difference between the two accounts.