A business firm periodically prepares a bank reconciliation statement to reconcile the bank balance as per the cash book with the passbook as these two show different balances for various reasons.
True. The balance as per the cash book and the passbook often do not tally due to timing differences in recording transactions or errors. Therefore, a Bank Reconciliation Statement is prepared periodically to reconcile these two balances.
Explanation
The provided text states that when a comparison is made between the firm's cash book and the bank passbook, the two balances often do not tally. Consequently, a Bank Reconciliation Statement is prepared to ascertain the causes of the difference—such as timing gaps or errors—and reflect them to reconcile (tally) the two balances.