Bank reconciliation statement

Meaning of a Pass book

Bank pass book is merely a copy of the customers

account in the books of a bank. The bank usually supplies this statement periodically or on demand. Recording of deposits: in case of deposits into the bank, the customer debits the bank account because bank is the receiver and the bank credits the customers account because customer is the giver. Recording of withdrawals: in case of withdrawals from the bank, the customer credits the bank account because bank is the giver and the bank debits the customers account because customer is the receiver.

Meaning of BRS
BRS is a statement which reconciles the bank balance

as per cash book with the balance as per bank pass book, by showing all causes of differences between the two.

Purpose of BRS
BRS is a statement is prepared to reconcile the bank

balance as per cash book with the balance as per bank pass book by showing all causes of differences between the two and to take necessary follow-up action.

Difference between bank statement and BRS

Basis of distinction Bank statement/pass book Bank reconciliation statement

1. Who prepares

It is prepared by the bank.

It is prepared by the bank customer i.e. account holder. It is prepared to reconcile the bank balance as per cash book with the bank balance shown by the bank statement.

2. Object

It is prepared to inform the customer about all transactions which have taken place during the period covered by the statement. It is prepared for a particular period. It is compulsory for the bank to prepare it.

3. Timing when prepared 4. Necessity

It is prepared at a particular date. It is not compulsory.

Difference between bank statement and BRS

Basis of distinction Bank statement/pass book Bank reconciliation statement

5. Contents

It showsDates of transactions Particulars of transactions Withdrawals Deposits balances

It showsCauses and disagreement Amount thereof

6. Starting amount

It starts with the balance It may start with bank as per customers account balance as per cash book in bank ledger or bank statement It shows the balance in customers account as per bank ledger at the end of the period It may show the bank balance as per cash book or bank statement at the end of period

7. Final result

Causes of Disagreement
Timing difference of recording banking transactions. Errors in cash book committed by the account holder. Errors in pass book committed by the bank.

Causes of Disagreement
Transactions appearing in the cash book but not in the

pass book: 1. Cheques issued but not yet presented for payment. 2. Cheques deposited but not yet collected by bank. Transactions appearing in the pass book but not in the cash book: 1. Bank charges. 2. Interest. 3. Direct payments made by bank. 4. Direct payment collected by bank. 5. Cheques deposited by bank are dishonored. 6. Discounted bills dishonored

Causes of Disagreement
Particulars Bank balance as per cash book Add: cheques deposited into the bank but not recorded in cash book Cheques issued but not yet presented for payment. Interest allowed in pass book only. Bills receivable directly collected by bank. Direct payment by a customer into bank but not recorded in cash book. Cheques issued returned on technical grounds. A wrong credit given by bank in pass book. Less: Cheques received and recorded in bank column but not yet sent to bank for collection. Cheques deposited but not yet collected. Bank charges, interest on overdraft debited in pass book only. Insurance premium paid directly by bank under standing advice. Cheques deposited for collection, returned dishonoured Discounted bills dishonoured. A wrong debit gtiven by bank in pass book Balance as per pass book . .. . . Amt Amt . ..

Causes of Disagreement
Particulars Bank balance as per pass book Add: Cheques received and recorded in bank column but not yet sent to bank for collection. Cheques deposited but not yet collected. Bank charges, interest on overdraft debited in pass book only. Insurance premium paid directly by bank under standing advice. Cheques deposited for collection, returned dishonoured Discounted bills dishonoured. A wrong debit gtiven by bank in pass book Less: cheques deposited into the bank but not recorded in cash book Cheques issued but not yet presented for payment. Interest allowed in pass book only. Bills receivable directly collected by bank. Direct payment by a customer into bank but not recorded in cash book. Cheques issued returned on technical grounds. A wrong credit given by bank in pass book. Balance as per cash book . .. . Amt Amt . ..

Note For overdraft, only the balances are written in minus else all the effects are same whether it is overdraft in cash book or in pass book.

Thank you..