Part I

In your own words, explain what a bank reconciliation is. For just this part, imagine the person you are explaining this to has never taken an accounting class and that his or her banking experience is strictly limited to managing his or her personal checking account. Feel free to discuss or summarize the different sections of a bank reconciliation if you feel this would be helpful. Try to capture the essence of why bank reconciliations are important and how they are done.

Part II

(1) Why dont we make journal entries for bank errors?

(2) Why do we bother including deposits in transit and outstanding checks? Wont they just work themselves out the following month?

(3) Why is Adjusted balance on the bank reconciliation twice?