the same in both the records. But, practically it may not be possible. When the balances do not agree with each other, the need for preparing a statement to explain the causes arises. This statement is called bank reconciliation statement (BRS).
The bank reconciliation statement is a statement that reconciles the balance as per the bank column of cash book with the balance as per the bank statement by giving the reasons for such difference along with the amount. As a result of this, internal record of a business (bank column of cash) can be reconciled with external record (bank statement). . .
Need for bank reconciliation statement It is important to compare the bank statement and bank column of cash book. If the two balances do not match, it is necessary to reconcile them to explain why the differences have occurred. It may be prepared every month, every week or even daily depending on the number of transactions and the needs of the business. Balance as per cash book / bank statement Balance as per cash book / bank statement The need for bank reconciliation statement is as follows: (i) To identify the reasons for the difference between the bank balance as per the cash book and bank balance as per bank statement.
(ii) To identify the delay in the clearance of cheques. (iii) To ascertain the correct balance of bank column of cash book. (iv) To discourage the accountants of the business as well as bank from misusing funds. Accountancy - .
Reasons why bank column of cash book and bank statement may differ The need for reconciliation arises only when there are differences in entries recorded in the cash book and bank statement. Sometimes, the bank balance as per both the records may be the same, but the entries may not match. In such cases also, bank reconciliation statement is to be prepared. But, before preparing the bank reconciliation statement, it is necessary to find out the reasons for the disagreement.
Difference between the two records (bank column of cash book and