Bank Reconciliation Statement

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BANK RECONCILIATION STATEMENT

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Meaning Concept

• Statement prepared by the Business entity,
• Reconciling/Matching the bank balance as per the
  cash book(Bank Column) the Pass book.
• find out the differences between the balances
  nullify them
• BRS is prepared by the business entity

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Cash V/s Pass Book

• The Cash Book is prepared by the business entity
• Pass book/Bank Statement is prepared by the bank
  to have a record of the customers banking
  transactions.

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BRS

• BRS is not the part of the Accounting
  process/financial statements.
• It is prepared at a particular date as a part of
  cash book
• not mandatory to be prepared, voluntary for
  matching the balances of both books

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Importance

• Bring out errors in Cash book/Pass book
• Detection of Undue delay by the bank
• Discourages any manipulation by Accountant
• Finding out actual position of bank balance

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Reasons of Differences

• Timing differences Differences due to different
  treatments in Cash Pass book.
• (on different dates)
• Other differences Difference due to errors in
  Cash book.

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Examples of Timing Differences

• Cheque deposited but not cleared
• Cheque issued but not presented for payment
• Bank Charges/Interest debited/credited in bank
  account.
• Direct payment/receipt by bank

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Other Differences

• Transaction not recorded/twice recorded in cash
  book.
• Any other clerical mistake( wrong amount, wrong
  casting, etc) in cash book.

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Balances

• Cash Book
• Debit Favourable/Positive Balance
• Credit Unfavorable/Negative/Overdraft
• Pass Book
• Debit Unfavorable/Overdraft/Negative
• Credit Positive/Favourable

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Techniques of reconciliation

• Without Adjusted Cash Book ( all changes are done
  in BRS )
• With Adjusted Cash Book (the errors of cash book
  are rectified in adjusted Cash book the timing
  differences in BRS from the rectified cash
  balance)
• Note Adjustments done in Adjusted Cash book not
  to be again treated in BRS.

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BRS- Basic Idea

• While preparing BRS, the changes (cancellation of
  the differences) are
• to be done in the book from which we have
  started
• Keeping in mind the treatment done of the same
  transaction in the other book.

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Illustration

• If the Debit balance as per Cash book (as on
  31/12/14) is 65,000
• Cheque of 15,000 was deposited in bank but not
  cleared.
• A cheque of 12,000 was issued but not presented
  for payment.
• Bank charges of 150 was debited.
• Bank interest of 1600 was credited to the
  account.
• A dividend of 2,000 was received by the bank
  from ABC company.

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Format
Particulars Plus () Minus (-)

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MCQs

• Q.1. A Bank Reconciliation Statement is prepared
  to know the causes for the difference between

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MCQs

• Q.2. Debit Balance as per Cash Book 2,000,
  Cheques deposited but not cleared 100, Cheques
  issued but not presented 150, Bank allowed
  interest 50, Bank collected dividend 50.
  Balance as per Pass Book will be

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MCQs

• Q.3. Under bank reconciliation statement, while
  adjusting the cash book

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MCQs

• Q.4. While preparing BRS, Starting with over
  draft balance of cash book, a cheque of 5,500
  deposited in bank and duly credited in pass book,
  but not recorded in cash book ____ in B.R.S

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MCQs

• Q.5. Bank Overdraft as per Cash Book is 10,500
• Interest debited by bank 3,500 for which advice
  was not received by account holder.
• Cheques deposited but not credited by bank
  7,500.
• Cheques issued but not yet presented 9,500.
• What is the Overdraft amount as per pass book?

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MCQs

• Q.6. When preparing a Bank Reconciliation
  Statement if you start with balance as per Pass
  Book, then cheques paid by bank recorded twice in
  Pass Book 1050 will be

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MCQs

• Q.7. When money is withdraw from bank ,the bank

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MCQs

• Q.8. The total payment side of Cash book is Rs.
  700 short , if Bank Reconciliation statement is
  started with passbook (overdraft )balance then

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MCQs

• Q.9. Mr. Y presented three cheques of
  Rs.3000,Rs.4500 and Rs.3600 with the bank on 28th
  March 2005. Out of these cheques amounting to
  Rs.4500and Rs.3000 were shown in the pass book
  in the month of April 2005. while reconciling the
  balance on 31-03-2005 which of these cheques
  would be taken in reconciliation

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MCQs

• Q.10. overdraft as per Pass book is given Rs.
  10,000
• Cheques deposited in bank but not recorded in
  cash book Rs. 100
• Cheque drawn not presented for payment Rs. 6,000
• Bank charges recorded twice in Cash book Rs. 30
• Overdraft as per cash book will be