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A Bank Reconciliation Statement (BRS) is used to compare the cash book balances of a firm with the bank's passbook balances, highlighting discrepancies. Differences often arise due to timing issues or errors made by either the business or the bank. Common reasons for these discrepancies include unpresented cheques, direct deposits, bank charges, and dishonored bills receivable.

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Anirban Biswas
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13 views4 pages

Presentation 1

A Bank Reconciliation Statement (BRS) is used to compare the cash book balances of a firm with the bank's passbook balances, highlighting discrepancies. Differences often arise due to timing issues or errors made by either the business or the bank. Common reasons for these discrepancies include unpresented cheques, direct deposits, bank charges, and dishonored bills receivable.

Uploaded by

Anirban Biswas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Bank Reconciliation Statement (BRS)

Meaning
 Reconciliation is the process of comparing two different records.
 Bank Reconciliation Statement (BRS) is a statement to reconcile the balances as per
the cash book prepared by the firm and the balances as per the pass book recorded by
the bank.
 The amount of balance shown in the passbook or the bank statement must tally with
the balance as shown in the cash book. But in practice, these are usually found to be
different.
 To show these differences, a statement is prepared. This statement is called Bank
Reconciliation statement.
Reasons for differences in BRS
The differences between the cash book and the bank passbook is caused by:
• Timing differences on recording of the transactions.
• Errors or omissions made by the business or by the bank.

A. Timing differences
1. Cheques issued by the bank but not yet presented for payment - In certain cases, Cheque
issued to creditors on or before the Specific date not presented in the Bank upto that Specific date.
Example: Cheque issued to A on 31st March 2021 presented for payment by A in his Bank on 5th April
2021.
2. Cheques paid / deposited into the bank but not yet collected – when a cheque is sent to the
Bank on a specific date, Account Holder enter it in his book But Bank has Credited it after that specific
date.
Example: Mr. A has deposited a Cheque of Rs 30,000 in his Bank on 30th march 2021 Bank has
credited it in A’s A/c on 2nd April 2021 due to Bank holidays.
1. Direct deposit made by the bank on behalf of the customer – Many customer deposit amount in our account
directly without making any intimation to us at that time or after. In such cases Bank credit our account but it remain
pending in Cash Book.
2. Amounts directly deposited in the bank account
3. Interest and dividends collected by the bank not entered in Cash Book – Sometimes investments are left
with the Bank in the safe custody; the Bank itself sees to it that the interest or the dividend is collected on the due
dates.
4. Direct payments made by the bank on behalf of the customers – In many cases Bank make many direct
payments due to our standing instructions which are debited by Bank in our accounts and we come to know about
these transactions only when we receive the Bank statement hence results in difference.
5. Bank charges and interest charged by Bank not entered in cash book – When Bank charges or interest is
charged by Bank, then Bank debits our account but such transactions are not entered in cash book due to no
intimation and hence results into difference between two.
6. Bills receivable discounted from Bank but dishonour - If the Bank is not able to receive payment on
promissory notes discounted by it, it will debit the customer‘s account together with the charges it may have
incurred. The customer will naturally make the entry only when he see the Pass book.

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