Specimen of Bank Reconciliation Statement

If you made a transaction in the bank, no matter how small or large, you’ll need to keep a record of it, and this BRS, or more precisely, this Bank Reconciliation Statement, will come in handy. So, what exactly is this ledger? Any transaction that takes place in a bank is documented in the journal. After the statement is recorded in the journal, it is entered into the ledger, which is the main book.

In some situations, the amount specified in the bank statement issued by the bank differs from the amount specified in the accounting book of the company prepared by the charter accountant. So, this bank reconciliation statement just examines the entities on a monthly basis to ensure that no issues arise in the future. This bank reconciliation statement, also known as a BRS, can be thought of as a matching record for the cash account entry in relation to the bank statement. The disparities between them will be checked by the Bank Reconciliation Statement, which will then make the necessary changes. In this post, you will learn about Bank Reconciliation Statements, their relevance, the features that bank reconciliation statements have, and why there are distinct cash books and bank passbooks, as well as how to produce a bank reconciliation statement and other key aspects. Let’s just have a look at them all.

A bank reconciliation statement is the record book or transactions of a bank account. This statement enables bank account holders to keep track of their funds and to amend transaction information. To put it another way, the bank reconciliation statement serves as the bank’s cheque book. The balance in the bank passbook statement and the balance in the cash book should match. All deposits shown in the credit column should also be shown in a deposit column on the statement. However, if the withdrawal exceeds the deposits, a debit balance will appear (overdraft). A passbook is usually given to a saver’s bank account holder, whereas a bank statement is given to a current account business.

Importance Of Bank Reconciliation Statements

The bank balance does not correspond with the company’s cash book in the vast majority of comparisons. As a result, it’s critical to understand the cause of the discrepancy, document it in the bank reconciliation statement, and then total the two balances. This statement explains why the bank balance and the company’s cash book have different amounts of money. This also aids in comprehending the features of bank reconciliation statements.

Characteristics of  Bank Reconciliation Statement 

In the cash book, a business entity or firm records bank deposits on the debit side of the bank column and withdrawals on the credit side of the bank column. Similarly, the bank records all of these transaction details in their books. The bank records deposits on the customer’s credit side and withdrawals on the customer’s debit side, which is a little different.

1.The bank reconciliation statement is a statement, as the name implies.

2.It is not an account of any kind, and it does not include any of the account’s processes.

3.It can be prepared at any moment during the fiscal year when a company needs it.

4.On a specific day, the bank reconciliation statement is prepared.

5.It can be prepared by an individual or a business to reconcile the causes for discrepancies between the bank balance in the passbook and the bank balance in the cash book.

Bank Reconciliation Statements are available in a variety of formats.

A bank reconciliation statement can be prepared using one of two methods:

1.Making bank reconciliation statements paperwork without changing the cash book balance.

2.After making modifications to the cash book balance, requesting a bank reconciliation statement.

Making a Bank Reconciliation Statement

A Step-by-Step Guide are as follows:

1.The statement’s record date is listed first.

2.Following that, the statement is updated with the balance from the cash book. The balance listed in the bank’s passbook is sometimes recorded.

3.Cheques that have been deposited but have not been collected are withdrawn.

4.The check is then issued but not yet deposited for payment, and the amount instantly placed in the bank account is recorded.

5.It subtracts all transactions such as bank debits, overdraft interest not recorded in cash books, discounted bills, and cheques.

7.All profits and credits collected by the company and directly deposited in the bank are added.

8.Adjustments are performed in response to faults and blunders.

9.The balance between the cash book and the bank statement should be the same once you’ve completed these steps.

Conclusion

We can simply conclude from the preceding article that a bank reconciliation statement is required. Bank statements may contain errors, and these BRS will be of great assistance to you at such moment. Bank statements will come in handy if you need to conduct large transactions or if you need to prepare an income tax return statement. Any bank’s main transaction medium is the bank statement. If the fundamental papers contain faults, it’s safe to assume that the rest will as well, so every organization must justify the fundamentals. The bank statement will be error-free as a result of the reconciliation statement, and any additional charges will be cleared as well. As a result, the reconciliation will examine whether the statement is safe and error-free before closing accounting.