BANK RECONCILIATION STATEMENT FORMAT
Bank Reconciliation Statement format include the following points
1) BRS
having heading as “Bank Reconciliation Statement as on _________” (date)
2) Balance
as per book of accounts maintained the Company needs to record.(A)
3) All
addition entries are grouped together in the inner column and total to the
outer column for the purpose of addition.(B)
4) All
deducting entries are grouped together in the inner column and total to the
outer column for the purpose of deduction. (C
)
5) Finally
we need to arrive at the Balance as per Pass Book. (E)
In above example we have taken the credit balance as per Pass Book. The position will be reversed in case of there is debit balance as per Pass Book.
Now a days many business enterprises using accounting software for bank reconciliation statement. This software decreases the amount of efforts and modifications if necessary. Few business enterprises prepare a Bank Reconciliation statement on daily basis. It is prepared from time to time to check that all the transaction related to banks is properly recorded by the company.
PURPOSE
OF BANK RECONCILATION STATEMENT:
In simple words Bank Reconciliation Statement
meaning refers to know why there is difference
between bank account maintained by the business and
pass book related to bank account of business. In simple words BRS means
summary of banking and business activity of reconciling entries. Company
maintained Bank Pass book can have debit and credit balances. Credit Balance in pass book refers to company
having money in the bank account and company maintained account having a debit
balance in there books of accounts. If Company maintained Pass Book having
debit balance it means Company borrowed money from the bank and company
maintained account having credit balance.
Bank Reconciliation Statement is a one kind of very
effective tool for detecting errors, frauds, unaccounted entries. There are
many reasons for difference
1) Bank
charges debited by the bank but not accounted by the company.
Interest
credited by the bank but not accounted by the company.
2)
Cheques issued by the
company but not presented to bank for payment.
3)
Cheques presented by
the company to the bank but still not cleared.
4)
Deposit of money by
some customer directly to company account but not accounted by the company.
5) Clerical
error in accounting of entries.
Bank Reconciliation statement is prepared by the
customer of the bank or accountant of a company with the purpose to know the
why there is difference in company’s books of records and bank pass book. Generally Bank Reconciliation Statement done
on monthly basis.
NEED
OF BANK RECONCILATION STATEMENT:
1) 1 ) Helps to identify errors made by company accountant.
2)
Helps to identify
errors made by the bank.
3)
Reduces the chances of
fraud.
4)
Helps to keeping a
track of all the transactions.
5)
Customers become sure
of correctness of the accounting entries made by them.
6)
Bank Reconciliation
Statement helps to know the actual Bank balance.
7)
BRS helps to
identifying any undue delay in the collection of cheques.
8)
BRS preparation is not
compulsory and there is not any fixed date on which it is to be prepared.
STEPS
FOR BANK RECONCILATION:
Bank Reconciliation Statement can be prepared when company
receives updated Pass Book or Bank Statement form the Bank. First and foremost step of the person one who
wants to prepare BRS must check that the opening balance of Bank Statement and
Bank book are matching with the balances as per the last Bank Reconciliation
Statement.
The following are the steps for Bank Reconciliation
Statement.
2) Collect the details of ac account maintained by the Company.
3) Get to know debit balance as per bank account or credit balance as per bank account.
4) Tally the Debit entries as per account maintained by the company with Credit side entries of the Pass Book and vice versa.
5) Tick the items appearing in both the books.
6) Unticked items will be the point of difference.
7) Pending entries in the last Bank Reconciliation Entries must me checked and make sure that all entries are ticked.
8) BRS can be prepared by taking balance as per pass book or balance as per account maintained in the books of accounts maintained by the company.
9) If staring point is Balance as per Pass Book then the ending balance will be Balance as per Book Balance maintained by the company.
BANK
RECONCILIATION STATEMENT RULES:
1) Any
debit balance in books of account maintained related to bank account referred
as amount deposited by the business.
2) Credit
balance in Pass Book is equal to Debit balance in books of accounts maintained
by the company.
3) Debit
balance in books of accounts means favorable balance.
4) Bank
Reconciliation Statement can be prepared at any time when all transaction
details related to bank pass book and account maintained book available.
CONCULSION:
Dear readers in this article you will get to know
about Bank Reconciliation Statement format, meaning, need and purpose of
preparing, steps and rules for preparing BRS etc. Basis of BRS difference is
because of difference due to timing, difference is due to bank recording of
transactions, difference due to errors or omissions. Hope you got all
information. If any questions kindly comment below.