Write short notes on Bank Reconciliation system.
Answers
Businesses maintain cash book to record both the cash as well as bank transactions. A Cashbook has a cash column which shows cash available with the business and a bank column which shows cash at bank.
Bank also keeps an account for every customer in their books. All the deposits are recorded on credit side of customer’s account and withdrawals are on the debit side of their account. An account statement is sent regularly to the customers by the bank.
It‘s not compulsory to prepare a BRS and there’s no fixed date for preparing BRS. BRS is prepared on a periodical basis for checking that bank related transactions are recorded properly in cash book’s bank column and also by the bank in their books. BRS helps to detect errors in recording transactions and determining the exact bank balance as on a specified date.