Bank Reconciliation Statement - PowerPoint PPT Presentation

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Bank Reconciliation Statement

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Here we have considered the Difference between the Bank balance as per Cash Book & the Pass book by preparation of the Bank Statement. The reasons of differences & importance of finding the variation is discussed – PowerPoint PPT presentation

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Title: Bank Reconciliation Statement


1
BANK RECONCILIATION STATEMENT
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2
Meaning Concept
  • Statement prepared by the Business entity,
  • Reconciling/Matching the bank balance as per the
    cash book(Bank Column) the Pass book.
  • find out the differences between the balances
    nullify them
  • BRS is prepared by the business entity

3
Cash V/s Pass Book
  • The Cash Book is prepared by the business entity
  • Pass book/Bank Statement is prepared by the bank
    to have a record of the customers banking
    transactions.

4
BRS
  • BRS is not the part of the Accounting
    process/financial statements.
  • It is prepared at a particular date as a part of
    cash book
  • not mandatory to be prepared, voluntary for
    matching the balances of both books

5
Importance
  • Bring out errors in Cash book/Pass book
  • Detection of Undue delay by the bank
  • Discourages any manipulation by Accountant
  • Finding out actual position of bank balance

6
Reasons of Differences
  • Timing differences Differences due to different
    treatments in Cash Pass book.
  • (on different dates)
  • Other differences Difference due to errors in
    Cash book.

7
Examples of Timing Differences
  • Cheque deposited but not cleared
  • Cheque issued but not presented for payment
  • Bank Charges/Interest debited/credited in bank
    account.
  • Direct payment/receipt by bank

8
Other Differences
  • Transaction not recorded/twice recorded in cash
    book.
  • Any other clerical mistake( wrong amount, wrong
    casting, etc) in cash book.

9
Balances
  • Cash Book
  • Debit Favourable/Positive Balance
  • Credit Unfavorable/Negative/Overdraft
  • Pass Book
  • Debit Unfavorable/Overdraft/Negative
  • Credit Positive/Favourable

10
Techniques of reconciliation
  • Without Adjusted Cash Book ( all changes are done
    in BRS )
  • With Adjusted Cash Book (the errors of cash book
    are rectified in adjusted Cash book the timing
    differences in BRS from the rectified cash
    balance)
  • Note Adjustments done in Adjusted Cash book not
    to be again treated in BRS.

11
BRS- Basic Idea
  • While preparing BRS, the changes (cancellation of
    the differences) are
  • to be done in the book from which we have
    started
  • Keeping in mind the treatment done of the same
    transaction in the other book.

12
Illustration
  • If the Debit balance as per Cash book (as on
    31/12/14) is 65,000
  • Cheque of 15,000 was deposited in bank but not
    cleared.
  • A cheque of 12,000 was issued but not presented
    for payment.
  • Bank charges of 150 was debited.
  • Bank interest of 1600 was credited to the
    account.
  • A dividend of 2,000 was received by the bank
    from ABC company.

13
Format
Particulars Plus () Minus (-)

14
MCQs
  • Q.1. A Bank Reconciliation Statement is prepared
    to know the causes for the difference between

15
MCQs
  • Q.2. Debit Balance as per Cash Book 2,000,
    Cheques deposited but not cleared 100, Cheques
    issued but not presented 150, Bank allowed
    interest 50, Bank collected dividend 50.
    Balance as per Pass Book will be

16
MCQs
  • Q.3. Under bank reconciliation statement, while
    adjusting the cash book

17
MCQs
  • Q.4. While preparing BRS, Starting with over
    draft balance of cash book, a cheque of 5,500
    deposited in bank and duly credited in pass book,
    but not recorded in cash book ____ in B.R.S

18
MCQs
  • Q.5. Bank Overdraft as per Cash Book is 10,500
  • Interest debited by bank 3,500 for which advice
    was not received by account holder.
  • Cheques deposited but not credited by bank
    7,500.
  • Cheques issued but not yet presented 9,500.
  • What is the Overdraft amount as per pass book?

19
MCQs
  • Q.6. When preparing a Bank Reconciliation
    Statement if you start with balance as per Pass
    Book, then cheques paid by bank recorded twice in
    Pass Book 1050 will be

20
MCQs
  • Q.7. When money is withdraw from bank ,the bank

21
MCQs
  • Q.8. The total payment side of Cash book is Rs.
    700 short , if Bank Reconciliation statement is
    started with passbook (overdraft )balance then

22
MCQs
  • Q.9. Mr. Y presented three cheques of
    Rs.3000,Rs.4500 and Rs.3600 with the bank on 28th
    March 2005. Out of these cheques amounting to
    Rs.4500and Rs.3000 were shown in the pass book
    in the month of April 2005. while reconciling the
    balance on 31-03-2005 which of these cheques
    would be taken in reconciliation

23
MCQs
  • Q.10. overdraft as per Pass book is given Rs.
    10,000
  • Cheques deposited in bank but not recorded in
    cash book Rs. 100
  • Cheque drawn not presented for payment Rs. 6,000
  • Bank charges recorded twice in Cash book Rs. 30
  • Overdraft as per cash book will be
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