accounting

Running head: ACCOUNTING 3

Classmate 1

The main reason for doing a bank reconciliation is that it provides the bank with a way to identify errors. Whether the errors were on purpose or not, it is important that the errors be identified so that they can be corrected. A bank reconciliation would allow the company to detect fraud if someone was stealing cash or other things from them. The cash balance reported by the bank on a particular day will likely not be the same as the cash balance reported by a company or individual as of that same day because of items such as outstanding checks or simply human error. Human error includes things that would go into the Cash Over and Short accounts where small amounts of money were miscounted, lost, etc. 

Classmate 2

There are many reasons for doing a bank reconciliation that can be beneficial. A bank reconciliation can be used to compare your records to the bank's records, this would allow you to see if there are any differences between the two sets of records. It can also be useful to do a bank reconciliation as a sort of fraud detection. You can see if checks have bounced or if any that were issued were changed or even stolen and cashed without you knowing. The two balances are known to have differences, because of the amount of cash you think you have versus what the bank says you have. There are several results that could occur from this including an overdrawn account, overdraft fees and bounced checks. I would say it is very important to keep up with the differences between the two balances to avoid these potential outcomes. There are many areas in which your records could vary from the banks records, some of these include but are not limited to: Fees and NSF checks. I believe the book mentioned others but these are two that I have personally experienced and witnessed. Overall, I would say this covers a good majority of the reasons for doing a bank reconciliation.