Bank Reconciliation Statement

it receives the bank statement. In this case, the bank records the receipts in the firm’s account at the bank but the same is not recorded in the firm’s cash book. As a result, the balance shown in the bank passbook will be more than the balance shown in the firm’s cash book. .

. (e) Interest and dividends collected by the bank When the bank collects interest and dividend on behalf of the customer, then these are immediately credited to the customers account. But the firm will know about these transactions and record the same in the cash book only when it receives a bank statement. Till then the balances as per the cash book and passbook will differ.

. . (f) Direct payments made by the bank on behalf of the customers Sometimes the customers give standing instructions to the bank to make some payment regularly on stated days to the third parties. For example, telephone bills, insurance premium, rent, taxes, etc.

are directly paid by the bank on behalf of the customer and debited to the account. As a result, the balance as per the bank passbook would be less than the one shown in the cash book. . .

(g) Cheques deposited/bills discounted dishonoured If a cheque deposited by the firm is dishonoured or a bill of exchange drawn by