What is the primary purpose of a bank reconciliation?

The primary purpose of a bank reconciliation is to ensure that the company's cash records match the bank's records. This process involves comparing the amounts recorded in the company's accounting records for cash transactions with the amounts shown on the bank statement. Discrepancies can arise due to various reasons such as outstanding checks, deposits in transit, bank service charges, or errors in either the company's books or the bank's records. By regularly performing a bank reconciliation, a business can identify any inaccuracies, ensure accurate financial reporting, and maintain proper control over its cash assets.

This process not only helps maintain the integrity of the financial statements but also plays a crucial role in fraud detection and financial management. Other options, while relevant to banking and finance, do not primarily address the goal of reconciling the records between a company and its bank, which is the essence of a bank reconciliation.