Reference no: EM132642701

Scenario:

1. Check for, 1555 sent to creditors on 30 August were not paid by the bank until 8 September.
Shah&Shah is a sole proprietorship and the cash book of Shah&Shah business showed a balance at the bank of 570 in hand on 31 August 2020. At the same date the bank statement balance of Shah&Shah account was 446 overdrawn. The difference was accounted for as follows.

2. Check amounting to 2520 paid into the bank on 31 August was not credited by the bank until 6 February.

3. A standing order for a charitable subscription of 60 had been paid by the bank on 21 August but no entry had been made in the cash book.

4. A check paid by Shah&Shah for rent on 21 August for345 had been entered in his cash book as 354.

Required:

Question 1) Why we need to prepare bank reconciliation statement.

Question 2) Why bank reconciliation statement need to be reconcile.

Question 3) Prepare Bank Reconciliation statement for Shah&Shah

Question 4) Generally explain what factors differentiate Shah&Shah form partnership.

Question 5) Explain different type of parties who are interested in Shah&Shah financial information also briefly summarize what will happen if Shah&Shah do not follow proper Accounting Principles.