Bank Reconciliation: Cash Book vs. Pass Book Balances, Exams of Accounting

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Bank

Reconciliation

Statement

Meaning

• Bank reconciliation statement is a statement which is

prepared to reconcile the difference between the bank

balance as per the cash book and the bank balance as per

the pass book.

Reasons for difference

• Timing differences on recording of the transactions
• Errors made by the business or by the bank

1. Timing Differences

• CHEQUES ISSUED BUT NOT YET PRESENTED FOR PAYMENT
• (^) CHEQUES DEPOSITED INTO BANK FOR COLLECTION BUT NOT YET COLLECTED
• DIRECT DEBITS MADE BY THE BANK
• AMOUNTS DIRECTLY DEPOSITED INTO BANK BY THIRD PARTIES
• (^) INTEREST AND DIVIDEND COLECTED BY THE BANK
• DIRECT PAYMENTS MADE BY THE BAN ON BEHALF OF THE BUSINESSMAN
• CHEQUES DEOPSITED/ BILLS DISCOUNTED DISHONOURED

Preparation of BRS

• When debit balance (favo.) as per cash book is given then the

balance as per pass book is to be ascertained.

• When credit balance (favo.) as per pass book is given then the

balance as per cash book is to be ascertained.

• When credit balance (un-favo./overdraft) as per cash book is given

then the overdraft balance as per pass book is to be ascertained.

• When debit balance (un-favo./overdraft) as per pass book is given

then the overdraft balance as per cash book is to be ascertained.