BANK RECONCILIATION STATEMENT

Meaning: A Bank Reconciliation Statement is a statement reconciling the

balance as shown by the Bank Pass book and the balance as shown by the Cash
book.

Objective: The objective of preparing Bank Reconciliation Statement is to

know the causes of difference between the two balances and pass necessary
correcting or adjusting entries in the books of the firm.

Importance of Bank Reconciliation Statement:

It highlights the causes of difference between Bank pass book and Cash book
It reduces the chances of fraud by the cash staff. Timely remittance of cash to
the bank is ensured.
There is a moral check on the staff of the organisation to keep the cash records
always up to date.
MKMA/06

Difference in both the Books

Causes of difference:
Cheques issued but not presented for payment.
Cheques sent for collection but not yet collected.
Cheques, bills, etc. credited but dishonoured.
Direct remittance of customers to the bank account.
Other collections made by the bank on behalf of customer.
Interest and bank charges debited to customers account.
Payments made by the bank on behalf of the customer.
Errors from the part of customer as well as the bank.

MKMA/06

BANK RECONCILIATION STATEMENT

As on--------------Balance as per:

Cash Book
Pass Book

Add: 1)
2)
3)
Deduct:
1)
2)
Balance as per: Bank Pass Book
Cash Book

******
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****
****
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*****
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****
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MKMA/06

Bank Reconciliation Statement Summary of adjustments to be made:

Adjustments to be made when bank reconciliation
statement is begun with:
Situations
Deposit
balance
as per
C.B.
(Dr.
balance in
C. B.)

Deposit
balance as
per P. B.
(Cr. balance
in P. B.)

O. D.
balance as
per C. B. (Cr.
Balance in C.
B.)

O. D. balance
as per P. B.
(Dr. balance
in P. B.)

Cheques issued but not presented for

payment

Add

Deduct

Deduct

Add

Interest credited in P. B. but not entered

in C. B.

Add

Deduct

Deduct

Add

Dividend, Interest, etc. collected and

credited by bank but not entered in C.
B.

Add

Deduct

Deduct

Add

Add

Deduct

Deduct

Add

Amount directly remitted to bank

account by customers but not recorded
in C. B.

MKMA/06

Wrong credit in the P. B. or in the C.

B.

Add / Deduct

Deduct / Add

Deduct / Add

Add / Deduct

Cheques deposited into bank but not

collected and credited

Deduct

Add

Add

Deduct

Bank charges debited in P. B. but not

entered in C. B.

Deduct

Add

Add

Deduct

Payments made by bank on behalf of

the customer not recorded in C. B.

Deduct

Add

Add

Deduct

Cheques entered in the bank column

of C. B. but omitted to be banked

Deduct

Add

Add

Deduct

10

Presented cheques and bills

dishonoured and debited in the P. B.
but not entered in C. B.

Deduct

Add

Add

Deduct

Deduct / Add

Add / Deduct

Add / Deduct

Deduct / Add

11

Wrong debit in the P. B. or in the C.

B.

MKMA/06