Bank reconciliation

there are two way to make accounting

1 cash

2 mercantile or accrual basis

if u make whole account by cash basis then no problem

but if u make account by mercantile syestem then u have to make your qwn bank a/c .

Yes Mr. Binit is right

practically it's not recommendable for your co. if large scale transactions are occuring on daily basis . bqz you can't track all the transactions by referring bank statement only.. bqz.. some times bank statement do not reflect all the required ref. for identification of transaction...

for ex...  let say.. if you paid someone by cheque .. and he has not deposited the cheque into bank .. than how can you track his account.. bqz he has 6 months time to deposit the cheque into bank..

no problem if you are following cash basic accounting. normally accountants do this when a large no of cheque are bouncing of their company. but problem is what Mr. Shammi has mentioned.

I agree with Binit and Shammi, U are prepared with ref of Bank stament, there is no control. The system will complete wrong. So that every body should follow the accrual basis method only.

 I have uploaded the suggestions for the students for download purpose.

Kindly follow the below link.

1.For IPCC and PCC - Cost FM

https://www.caclubindia.com/forum/important-suggestions-for-pcc-and-ipcc-students-for-cost-amp-fm-86545.asp

2. For IPCC and PCC - Law, Ethics and Communication

https://www.caclubindia.com/forum/important-suggestions-for-pcc-and-ipcc-students-for-law-eth-86515.asp

Originally posted by : binit kumar jindal
	there are two way to make accounting 1 cash 2 mercantile or accrual basis   if u make whole account by cash basis then no problem but if u make account by mercantile syestem then u have to make your qwn bank a/c .

totally agree with binit...

Cash system of account does not mean that you account the receipts and payments on clearance of cheques in the bank account.  Ideally, the transactions are required to be accounted as and when the dues are settled.  Accounting of Income on receipt of cheque and payment will be the appropriate way of accounting. There may be  some transactions in the year end which might left unaccounted in the event of accounting the transactions based on entries in the bank statements.