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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 customers
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.

Balances
CASH BOOK
DEBIT : FAVOURABLE/POSITIVE BALANCE

CREDIT :
UNFAVORABLE/NEGATIVE/OVERDRAFT

PASS BOOK
DEBIT :
UNFAVORABLE/OVERDRAFT/NEGATIVE
CREDIT : POSITIVE/FAVOURABLE

Techniques
Techniques of
of reconciliation
reconciliation

1)

Without Adjusted Cash Book ( all changes are

done in BRS )

2)

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.

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.

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

Format
Particulars

Plus (+)

Minus (-)

MCQs
Q.1. A Bank Reconciliation Statement is prepared to
know the causes for the difference between:
The balances as per cash column of Cash Book and the Pass Book
The balance as per bank column of Cash Book and the Pass Book.
T

The balance as per bank column of Cash Book and balances as per

cash column of Cash Book

None of the above.

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:
` 2,100
` 1,950

` 2,350

` 2,150

MCQs
Q.3. Under bank reconciliation statement, while
adjusting the cash book
All the errors and omissions in the cashbook are taken into consideration
All the errors and omissions in the passbook are taken into consideration

Delays in recording in the passbook due to difference in timing are taken into
consideration

All of the above

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
` 5500 will be added
` 5500 will be subtracted

` 11000 will be added

` 11000 will be subtracted

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?

` 12,000
` 16,000
` 5,000

` 9,000

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
Added
Deducted

Not required to be adjusted

None of the three

MCQs
Q.7. When money is withdraw from bank ,the bank
Credits customers a/c

Debits customers A/c

Credits and debits customers a/c

None of these

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
Rs. 700 will be less
Rs. 700 will be added
Same balance as per cash book

None of these

MCQs
Q.9. Mr. Y presented three cheques of Rs.3000,Rs.4500 and Rs.3600 with
th March 2005. Out of these cheques amounting to
the bank on 28th
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
Rs.3600
Rs.3000
Rs.4500 and Rs.3000

Rs.3600 and Rs.3000

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
Rs.16,000
Rs.16,130
Rs. 15,000

None of the three