15 Bank Reconciliation Statement

Learning Objectives 

• To understand the meaning of Bank Reconciliation Statement.

• To know the reasons for difference in the Bank Account and the Bank Column of the Cash Book.

• To prepare Bank Reconciliation Statement with these aspects as starting points: 

• Favourable Balance as per Cash Book, 

• Unfavourable Balance as per cash Book, 

• Favourable Balance as per Bank Pass Book, and 4. Unfavourable Balance as per Bank Pass Book. 

Bank Reconciliation Statement 

• Bank Reconciliation Statement is the statement which is prepared to reconcile or equalize the company's Accounts book with Banker's Statement. 

• It is prepared at regular intervals.

• It shows the reasons for disagreement between the balances as per bank column of cash book and bank pass book.

Reasons for difference between Cash Book and Bank Statement 

Overdraft - Un-favorable 

• Overdraft / Un-favorable means that money is drawn in excess from the account. 

Balance as per Pass Book Vs. Cash Book - at a glance 

BRS with Debit Balance as per Cash Book as starting point

BRS with favourable balance as per pass book as starting point 

BRS with unfavourable balance as per cash book as starting point 

BRS with unfavourable balance as per pass book as starting point 

Note:- 

• Cash book includes both cash transactions and bank transactions. Mentioning cash book in BRS referred only on bank transactions. 

• Sometimes bank transactions written as cash transactions also error will also occur. Then in BRS will get affected.

Favorable - Cash book to Pass book (cash book at beginning) (Addition to cash book balance) 

• Amount appears credit side of cash book but that amount doesn't or lesser than that appears on debit / withdrawal side of Pass book then this transaction should be ADD to cash book balance. 

• Amount appears credit / deposit side of pass book but that amount doesn't or lesser than that appears on debit side of Cash book then this transaction should be ADD to cash book balance. 

Favorable - Cash book to Pass book (cash book at beginning) (Subtraction to cash book balance) 

• Amount appears Debit side of cash book but that amount doesn't or lesser than that appears on Credit / Deposit side of Pass book then this transaction should be SUBTRACT to cash book balance. 

• Amount appears Debit / Withdrawal side of pass book but that amount doesn't or lesser than that appears on Credit side of Cash book then this transaction should be SUBTRACT to cash book balance.

Favorable - Pass book to Cash book (Pass book at beginning) 

• Vise versa of "Favorable - Cash book to Pass book" that means addition transaction which mentioned in "Favorable - Cash book to Pass book" should do subtract in "Favorable - Pass book to Cash book". 

Un-Favorable - Pass book to Cash book (Pass book at beginning) 

• Same as did in "Favorable - Cash book to Pass book" that means addition transaction which mentioned in "Favorable - Cash book to Pass book" should also do addition in "Un-Favorable - Pass book to Cash book" and subtraction as vice versa.

Un-Favorable - Cash book to Pass book (Cash book at beginning) 

• Same as did in "Favorable - Pass book to Cash book" that means addition transaction which mentioned in "Favorable - Pass book to Cash book" should also do addition in "Un-Favorable - Cash book to Pass book" and subtraction as vice versa.