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Sunday, 5 August 2018

How to prepare bank reconciliation statement

Bank Reconciliation Statement is prepared to match Cashbook ( Bank column ) with Bank passbook or Bank account statement. Usually some differences occur due to time gap or bank transactions. E.g. if you have issued cheques of Rs 10000 on 1st march then it may be possible that cheques are not presented into bank for payment in the month of March. When you will match , you will find that balance in passbook is more than balance in your Cashbook. Bank may debit your account with bank charges but you didn't know about this transaction so there will be difference.

Now the question arises that how is BRS prepared in easy way. Here the best method for preparation is described that will be useful to you.

Before making BRS you must know that there are four type of balances of passbook and Cashbook. You have to start with any of the four balances given below:

1. Balance as per Cashbook ( Dr balance)
2. Balance as per Cashbook ( CR balance)
3. Overdraft as per Cashbook ( Cr balance)
4. Overdraft as per passbook ( Dr balance)

Now you have to keep in mind that debit entries in your bank column of cashbook
Should be equal to Credit entries in bank pass book and vice versa.

Best rule for preparing BRS:

If you are starting from the following balances:

1. Cash Book Dr balance  or
2. Pass Book Dr balance

Then Cashbook balance must be equal to passbook balance. Add or Less will be done only from the Cashbook. E.g. if bank has debited your bank account with Rs 500 as bank charges then you will find passbook balance less than Cashbook balance with Rs 500 therefore Rs 500 will be deducted from Cashbook to make equal both.

If you are starting with following balances

1. Passbook credit balance
2. Cashbook credit balance

Then you have to think from the point of view of passbook. All add or less will be done from the passbook. E.g if bank has credited your bank account with Rs 1000 then your Cashbook balance will be less than passbook balance with Rs 1000 therefore Rs 1000 should be deducted from passbook to make equal both the Cashbook and passbook.


If you have any query further, feel free to comment.




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