DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name of the Participant : M. Ramakrishna

Designation : Head of Section
Branch : Commercial & Computer Practice
Institute : Govt. Polytechnic for women,
Bheemunipatnam
Year/Semester : I Year
Subject : Accountancy-I
Sub-code : CCP-102
Topic : Bank Reconciliation Statement
Sub Topic : Purpose & meaning of
Bank Reconciliation Statement
Duration : 50 Minutes
Teaching aids : Power Point Presentation

CCP102.77-78 1
Objectives :

On completion of this period, you would be

able to know:

 the need for Bank Reconciliation Statement

 the procedure for preparation of Bank Reconciliation
Statement
 the reasons for disagreement between balances of
Cash Book and Pass Book

CCP102.77-78 2
Recap

In the last class, We discussed about

 Pass Book and Cash Book

 Purpose of Bank Reconciliation Statement
 Meaning of Bank Reconciliation Statement

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What is Bank Reconciliation Statement

 A statement prepared
 to find out the reasons of difference
 between the balance shown by
Trader’s Cash Book
Banker’s Pass Book

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Need for Bank Reconciliation Statement

 To know the exact cash book balance

 to detect and rectify the mistakes

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Procedure for preparation of
Bank Reconciliation Statement
 By comparing the cash book and pass book, list out the
reasons for difference.
 Prepare Bank reconciliation statement by taking pass
book balance as starting point and arrive at cash book
balance or vice-versa
 Adjusting the differences which are affecting the
balances either by add or less to start balance

CCP102.77-78 6
 Causes for disagreement between the
balances of Cash Book and Pass Book

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Now, we discuss about certain causes for
disagreement of cash book and pass book
balances

 Cheques deposited but not collected

 Cheques issued but not presented for payment
 Cheques/Cash directly deposited by customers
 Payments directly made by the bank
 Dividend or interest collected and credited by
the bank

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Cheques deposited but not collected

 Outstation and crossed cheques sent to bank

 trader debits his bank account
 before the collection date
 banker records only after collection

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By comparing the entries in the
Cash Book and Pass Book
 Cash Book shows higher balance
 Pass Book shows lower balance

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Adjusting the entry in
Bank Reconciliation Statement,
if you start with

 Cash Book balance - Less

 Pass Book balance - Add

CCP102.77-78 11
Cheques issued but not presented for
payment

 When Trader issues cheques

 credits the bank column
 before the date of payment
 banker debits
 on the actual date of payment

CCP102.77-78 12
By comparing the entries with the
Cash Book and Pass Book
 Cash Book shows lower balance
 Pass Book shows higher balance

CCP102.77-78 13
Adjusting the entry in
Bank Reconciliation Statement,
if you start with

 Cash Book balance - Add

 Pass Book balance - Less

CCP102.77-78 14
Cheques/Cash directly deposited by customers

 Direct deposits by debtors of the trader

 banker credits
 trader debits only after receiving communication

CCP102.77-78 15
By comparing entries with the Cash Book
and Pass Book

 Pass Book shows higher balance

 Cash Book shows lower balance

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Adjusting the entry in Bank Reconciliation
Statement, if you start with

 Cash Book balance - Add

 Pass Book balance - Less

CCP102.77-78 17
Payments directly made by the Bank

 Direct payments like

Telephone Bill, Electricity Bill etc.,
 made by the banker on behalf of trader
 based on the standing orders
 banker debits all such payments

CCP102.77-78 18
By comparing entries with the Cash Book
and Pass Book

 Pass Book shows lower balance

 Cash Book shows higher balance

CCP102.77-78 19
Adjusting the entry in
Bank Reconciliation Statement,
if you start with

 Cash Book balance – Less

 Pass Book balance – Add

CCP102.77-78 20
Dividends or Interest, Collected and
Credited by the Bank

 On execution of the Instructions of the Customer/Trader

 banker collects
Interest, Commission and Dividends etc.
 And credits the trader’s account
 trader debits only after receiving communication

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Comparing entries with the Cash Book
and Pass Book

 The Pass Book shows higher balance

 The Cash Book shows lower balance

CCP102.77-78 22
Adjusting the entry in
Bank Reconciliation Statement,
if you start with

 Cash Book balance - Add

 Pass Book balance - Less

CCP102.77-78 23
Quiz

CCP102.77-78 24
Bank Reconciliation Statement
is prepared by comparing balances of cash
book and pass book

 True
 False

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Bank Reconciliation Statement is
prepared at the

 end of the year

 end of half-year
 end of quarter year
 periodical intervals

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For given Cash Book balance the find out
balance will be

 Cash book balance

 Pass book balance
 Cheque book balance
 Pay-in-slip book balance

CCP102.77-78 27
For given pass book balance, cheques
deposited but not collected should be
adjusted by

 Add
 Less
 Debit
 Credit

CCP102.77-78 28
Frequently asked questions

 Write the procedure involved in preparation of Bank

Reconciliation Statement

 Write any four reasons for disagreement of Balances of

Cash Book and Pass Book

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Assignment

1. Write down the procedure involved in preparation of

BRS
2. What are the reasons for the disagreement of balance
of cash box and pass book

CCP102.77-78 30
Summary

We discussed about

 Need of Bank Reconciliation Statement

 Procedure for preparation of Bank Reconciliation
Statement
 Reasons for disagreement of Cash Book and Pass Book
balances
 Adjusting the entries in Bank Reconciliation Statement

CCP102.77-78 31