Name the two situations with regard to balances while preparing the Bank
Reconciliation Statement.
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Bank Reconciliation Statement:
Bank Reconciliation Statement, in short BRS – One of the dreaded chapters by even toppers, is actually not very tough! Although it is a bit tricky at some points, but this is what makes it even more fascinating.
Before starting off, let’s begin with a very basic discussion. What actually is a Bank Statement? A bank issues a pass book on periodical terms i.e. at year end mostly. Now this pass book is actually a cash book maintained by the bank. This cash book contains all records related your account and it’s transactions in a general accounting format. So you can now deduce that bank statement or pass book is nothing but a cash book showing the journal entries or simply, the effect of our transactions on the bank financially. Now let’s dig in to what is Reconciliation actually. It in its most simple sense, it means making anything compatible or consistent with another. So combining the two ideas, we get that BRS is basically making bank’s or our records compatible with the other one. Hence, our cash book and bank’s cash book (pass book) should match or be equal. We begin with a comprehensive definition of Bank Reconciliation Statement.
Bank Reconciliation Statement – Basics:
In bookkeeping, a bank reconciliation statement is a process that explains the difference on a specified date between the bank balance shown in an organization’s bank statement, as supplied by the bank, and the corresponding amount shown in the organization’s own accounting records
Now, we have understood that the cash and pass book don’t tally. But there ought to be a reason for this. Yes! We have it.
The difference in passbook & cashbook arises because of various reasons, viz.:
Time gap between recording of entries (Say, delay in information flow)
Errors & Omissions
To illustrate:-
Cheques issued but not presented
Cheque deposited but not cleared
Bank Interest received (charged in case of overdraft balance) but no entry passed in cash book
Bank charges unrecorded
ECS debited or direct payment but not recorded in cash book
Automatic credit in the bank account (interest, dividend, etc.) & no information received in that regards.
Wrong amount recorded in cash book
Posted in another account
Dishonour of a bill discounted with the bank
Bills collected by the bank on behalf of customer
Hope this helps you
Mark as a brainliest
Bank Reconciliation Statement, in short BRS – One of the dreaded chapters by even toppers, is actually not very tough! Although it is a bit tricky at some points, but this is what makes it even more fascinating.
Before starting off, let’s begin with a very basic discussion. What actually is a Bank Statement? A bank issues a pass book on periodical terms i.e. at year end mostly. Now this pass book is actually a cash book maintained by the bank. This cash book contains all records related your account and it’s transactions in a general accounting format. So you can now deduce that bank statement or pass book is nothing but a cash book showing the journal entries or simply, the effect of our transactions on the bank financially. Now let’s dig in to what is Reconciliation actually. It in its most simple sense, it means making anything compatible or consistent with another. So combining the two ideas, we get that BRS is basically making bank’s or our records compatible with the other one. Hence, our cash book and bank’s cash book (pass book) should match or be equal. We begin with a comprehensive definition of Bank Reconciliation Statement.
Bank Reconciliation Statement – Basics:
In bookkeeping, a bank reconciliation statement is a process that explains the difference on a specified date between the bank balance shown in an organization’s bank statement, as supplied by the bank, and the corresponding amount shown in the organization’s own accounting records
Now, we have understood that the cash and pass book don’t tally. But there ought to be a reason for this. Yes! We have it.
The difference in passbook & cashbook arises because of various reasons, viz.:
Time gap between recording of entries (Say, delay in information flow)
Errors & Omissions
To illustrate:-
Cheques issued but not presented
Cheque deposited but not cleared
Bank Interest received (charged in case of overdraft balance) but no entry passed in cash book
Bank charges unrecorded
ECS debited or direct payment but not recorded in cash book
Automatic credit in the bank account (interest, dividend, etc.) & no information received in that regards.
Wrong amount recorded in cash book
Posted in another account
Dishonour of a bill discounted with the bank
Bills collected by the bank on behalf of customer
Hope this helps you
Mark as a brainliest
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