explain the procedure of preparing a bank reconciliation statement. state various reasons of disagreement between the balance shown by the cash book and the pass book.
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Bank Reconciliation Statement is usually made so that there is no difference between the bank and the proprietor or the firm
It is very easy to prepare the bank reconciliation statement. While preparing the bank reconciliation statement the accountant has to go step by step. We are describing the various steps to be taken while preparing of bank reconciliation statement:-
First of all accountant must check that the opening balances of bank statement and bank book are matching with the balances as per last bank reconciliation statement.All entries must be checked very carefully and ticked in bank statement and the bank book.Pending entries in last bank reconciliation also must be checked and make sure that all the entries are ticked.Then make the list of non-ticked entries on a separate piece of paper.Now, to reconcile the balances of bank statement and bank book, the accountant has to take a base of one balance either as per bank statement or as per bank book. Here, we are taking the balance as per bank book as base balance and we are assuming that the balance as per bank book is debit balance.Add the amount of cheques issued by us but not presented for payment.Add the amount directly credited by the bank in our account.Add the amount of cheque issued by us but dishonoured by bank.Subtract the amount of cheques deposited by us but not cleared.Subtract the amount of cheques deposited by us but dishonoured.Subtract the amount which are debited directly in our account.Add or subtract the amount if mistake in balancing either in bank statement or in bank book.
After making the above adjustments the balance must be equal to the balance as per bank statement or pass book
Various reasons for the disagreement of Cash book and Pass book are the following:
1. Cheque issued or drawn to the creditor but not paid by bank
2. Cheque deposited for collection but not yet collected and credited by bank
3. Amount directly deposited into the bank by the debtors
4. Income collected by the bank
5. Interests on deposits
6. Expenses paid by the bank directly
7. Bank charges
8. Errors and Omission
It is very easy to prepare the bank reconciliation statement. While preparing the bank reconciliation statement the accountant has to go step by step. We are describing the various steps to be taken while preparing of bank reconciliation statement:-
First of all accountant must check that the opening balances of bank statement and bank book are matching with the balances as per last bank reconciliation statement.All entries must be checked very carefully and ticked in bank statement and the bank book.Pending entries in last bank reconciliation also must be checked and make sure that all the entries are ticked.Then make the list of non-ticked entries on a separate piece of paper.Now, to reconcile the balances of bank statement and bank book, the accountant has to take a base of one balance either as per bank statement or as per bank book. Here, we are taking the balance as per bank book as base balance and we are assuming that the balance as per bank book is debit balance.Add the amount of cheques issued by us but not presented for payment.Add the amount directly credited by the bank in our account.Add the amount of cheque issued by us but dishonoured by bank.Subtract the amount of cheques deposited by us but not cleared.Subtract the amount of cheques deposited by us but dishonoured.Subtract the amount which are debited directly in our account.Add or subtract the amount if mistake in balancing either in bank statement or in bank book.
After making the above adjustments the balance must be equal to the balance as per bank statement or pass book
Various reasons for the disagreement of Cash book and Pass book are the following:
1. Cheque issued or drawn to the creditor but not paid by bank
2. Cheque deposited for collection but not yet collected and credited by bank
3. Amount directly deposited into the bank by the debtors
4. Income collected by the bank
5. Interests on deposits
6. Expenses paid by the bank directly
7. Bank charges
8. Errors and Omission
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