A discrepancy usually will exist between a company’s bank statement balance and its cash records due to the time lag associated with the use of a checking account. The time lag results in many transactions being recorded on the company’s records prior to their appearance on the bank statement. The bank statement balance and the cash records must be brought into agreement to determine their accuracy. This result can be achieved by using a bank reconciliation.

Required
Prepare a written report that explains a bank reconciliation.