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BANK RECONCILIATION
STATEMENT
 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

 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 customer’s
banking transactions.
 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
 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

 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.
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

 Other Differences

 Transaction not recorded/twice recorded in

cash book.

 Any other clerical mistake( wrong amount,

wrong casting, etc) in cash book.
 Interesting, right?
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