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Ncert Fm-Ac-xi Chapter 5

Ncert Fm-Ac-xi Chapter 5

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Published by shaannivas
Financial Accounting I & Accountancy II
Financial Accounting I & Accountancy II

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Published by: shaannivas on May 31, 2013
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05/31/2013

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I
n chapter 4, you have learnt that the business organisations keep a record of their cash and bank transactions in a cash book. Thecash book also serves the purpose of both the cashaccount and the bank account and shows the balance of both at the end of the period.Once the cash book has been balanced, it isusual to check its details with the records of thefirm’s bank transactions as recorded by the bank. To enable this check, the cashier needs to ensurethat the cash book is completely up to date and a recent bank statement (or a bank passbook) has been obtained from the bank. A bank statement or a bank passbook is a copy of a bank account asshown by the bank records. This enable the bank customers to check their funds in the bank regularly and update their own records of transactions that have occurred. An illustrative bank passbook of a current account is shown infigure 5.1. The amount of balance shown in the passbook or the bank statement must tally with the balanceas shown in the cash book. But in practice, theseare usually found to be different. Hence, we haveto ascertain the causes for such difference. It will be observed that a bank statement/passbook shows all deposits in the credit column and withdrawals in the debit column. Thus, if depositsexceed withdrawals it shows a credit balance andif withdrawals exceed deposits it will show a debit  balance (overdraft).
EARNING
O
BJECTIVES
 After studying this chapter, you will be able to :state the meaning and need for the preparation of bank reconciliation statement;identify causes of difference between bank balance as per cash book and pass book;prepare the bank reconciliation statement;ascertain the correct bank balance as per cash book;
Bank Reconciliation Statement
5
 
151Bank Reconciliation Statement 
5.1 Need for Reconciliation
It is generally experienced that when a comparison is made between the bank  balance as shown in the firm’s cash book, the two balances do not tally.Hence, we have to first ascertain the causes of difference thereof and thenreflect them in a statement called
Bank Reconciliation Statement 
to reconcile(tally) the two balances.In order to prepare a bank reconciliation statement we need to have a  bank balance as per the cash book and a bank statement as on a particular day along with details of both the books. If the two balances differ, the entriesin both the books are compared and the items on account of which thedifference has arisen are ascertained with the respective amounts involved sothat the bank reconciliation statement may be prepared. Its format shown infigure 5.5.
ParticularsAmounRs.
Balance as per cash book.......
 Add 
:Cheques issued but not presented.......Interest credited by the bank..............
Less 
:Cheques deposited but not credited by the bank.......Bank charges not recorded in the cash book.......Balance as per the passbookxxx
Fig. 5.2 :
 
Proforma of bank reconciliation statement 
It can also be prepared with two amount columns one showing additions(+ column) and another showing deductions (-column). For convenience, weusually adopt this treatment.
ParticularsAmountAmounRs.Rs.(+)()
Balance as per cash book......Cheques issued but not presented `......Interest credited by the bank......Cheque deposited but not credited by the bank......Bank charges not recorded in the cash book......Balance as per the passbook.xxx
Fig. 5.3 :
Proforma of bank reconcitiation statement (table form)
 
152Bank Reconciliation Statement 
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   F   i  g .   5 .   1  :
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