if withdrawals exceed deposits it will show a debit

if withdrawals exceed deposits it will show a debit balance (overdraft). L EARNING O BJECTIVES After studying this chapter, you will be able to : state the meaning and need for the preparation of bank reconciliation statement; identify causes of difference between bank balance as per cash book and pass book; prepare the bank reconciliation statement; ascertain the correct bank balance as per cash book; It is generally experienced that when a comparison is made between the bank balance as shown in the firm’s cash book, the two balances do not tally. Hence, we have to first ascertain the causes of difference thereof and then reflect them in a statement called Bank Reconciliation Statement to reconcile (tally) the two balances. In order to prepare a bank reconciliation statement we need to have a bank balance as per the cash book and a bank statement as on a particular day along with details of both the books. If the two balances differ, the entries in both the books are compared and the items on account of which the difference has arisen are ascertained with the respective amounts involved so