compulsory, if reconciliation is done during different months. But if reconciliation is done at the end of the accounting year or financial year, the cash book must be updated so as to reflect the correct bank balance in the balance sheet. Given the causes of disagreement, the balance of one record (cash book or bank statement) can be either more or less compared to the other record (cash book or bank statement). Bank reconciliation statement can be prepared on the basis of (a) ‘Balance’ presentation, or (b) ‘Plus & Minus’ presentation .
. Balance presentation method When balance of cash book or bank statement is given: Format Bank Reconciliation Statement as on -------------------- Amount ` Amount ` Balance as per cash book (favourable balance) Add: . Cheques issued but not presented . Credits in the pass book only (a) Interest credited in bank statement (b) Dividend and other income (c) Direct deposit by a party .
Any error in cash book/ bank statement which has the effect of increasing the balance as per bank statement Less: . Cheques deposited but not credited . Cheques dishonoured but not entered in cash book . Debits in bank statement only (a) Interest debited (b) Insurance premium, loan instalment, etc., paid as per standing instructions (c) Direct payment by banker .
Any error in cash book/ bank statement which has the effect of decreasing the balance as per bank statement Balance as per bank statement Accountancy - The abridged version of the above statement is given below: Bank Reconciliation Statement as on Amount ` Amount ` Balance as per cash book Add: The transactions which increase the balance as per bank statement --------- --------- Less: The transactions which decrease the balance as per bank statement --------- --------- Balance as per bank statement --------- If unfavourable balance as per cash book is the starting point, then reverse is the procedure for preparing bank reconciliation statement. This means that, items that are added are to be subtracted and items that are subtracted are to be added. Based on the earlier