transaction relating to cheques deposited and wrong balancing. In these cases, obviously, there will be differences between bank balance as per bank statement and bank balance as per cash book. For example, the cheque deposited for ` 50000, wrongly entered by the bank as ` , . This will lead to a difference of ` , between the cash book balance and the balance as per bank statement.
In a nutshell, based on the differences, the cash book balance will be more than bank statement balance when: the cash book balance will be less than the bank statement balance when: . Amounts deposited into bank but not yet credited . No entry made in cash book for a) Bank charges and bank interest b) Dishonoured cheques c) Amount paid directly by the bank to others d) Debit made in the pass book . Any error in addition to these in the cash book or bank statement which has the effect of high balance as per cash book .
Cheques issued but not yet presented . No entry made in cash book for a) Interest and dividends collected by the bank b) Amount paid by customer of the business directly in to the bank c) Bills collected by the bank on behalf of the customer . Any error in addition to these in the cash book or bank statement which has the effect of low balance as per cash book . Preparation of bank reconciliation statement After having identified the causes of differences, the reconciliation may be done in the following way: Bank reconciliation statement can be prepared either from the balance as per cash book or bank statement.
If it is prepared from the balance of cash book, the effect of the transaction will be studied on the balance as per bank statement. If it is prepared from the balance as per bank statement, the effect of the transaction will be studied on the balance as per cash book. Accountancy - Adjusting the cash book before preparing the bank reconciliation statement is not