Chapter 7 (Part b)

Financial Assets

Bank Reconciliation
Statement
Bank Statement:
A bank statement is a formal statement issued by
bank to its customer on periodically basis. A
bank statement shows the cash in flows and
cash outflows of our bank account.

Bank Reconciliation Statement:

A process in which we try to explain the
differences between balance as per bank
record and balance as per customer
account.

BRS..Contt
Possible Reasons of Changes:
1. Outstanding Cheque:
. Those cheques which are issued by
customer/business but yet not have been
presented to bank or yet not been cashed.
2. Deposit in Transit:
. Cash receipts/deposits that are being recorded
by the depositor/customer but yet not have
been recorded by bank, as because it is still not
brought to bank.

BRS..Contt
3. Service Charges:
Bank do charge you against the services
facilities it gives it to you. Such charges are
deducted and often being not by the customer.

4. Not Sufficient Funds:

NSF is that amount which was deposited to you
account by the bank because you had made a
deposit in cheque but now is been subtracted,
as of not sufficient funds in issuer account.

BRS..Contt
5. Interest Earned:
Interest amount is that amount which have
earned on your bank account and this amount
is added to your account by bank. So it may
happen that customer had not recorded it yet.

6. Miscellaneous Bank charges and

Credit:
All the other things come under this heading.
E,g. Note Receivable collection charges etc.

Reconciling the Bank

Statement
Balance per Bank

Balance per Depositor

+ Deposits in Transit

+ Deposits by Bank
(credit memos)

- Outstanding Checks

- Service Charge
- NSF Checks

Bank Errors

Book Errors

= Adjusted Balance

= Adjusted Balance

Balance per bank statement, July 31

Additions:
Deposit in transit
Deductions:
Bank error
$
486
Outstanding checks
2,417
Adjusted cash balance

$ 9,610

Balance per depositor's records, July 31

Additions:
Interest
Deductions:
Recording error
$
28
NSF check
225
Adjusted cash balance

$ 7,430

500

2,903
$ 7,207

30

253
$ 7,207

Lets do numerical related to

BRS.

THANKS