5. Bank Reconciliation Statement
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Transcript of 5. Bank Reconciliation Statement
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Bank Reconciliation Statement (B.R.S)
The bank reconciliation statement is a statement
Prepared to reconcile and explain the cause of
disagreement between the balance as per cash
book and as the same as per pass book or bank
statement as on particular date. This statement is
no part of book keeping system of the firm.it is a
memorandum reconciling the two balances,
drawn up by way of check to establish theaccuracy of the two balance.
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Advantages of Reconciliation
Reconciliation explains clearly why the two bank
balances, the balance as shown by the bankstatement and the balance as shown by the cashbook,do not agree on a particular date
By listing and studying the causes of discrepancies
Reconciliation at regular intervals will enable anyerror or omission to be discovered and rectified
without delay
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Causes Of Disagreement
Outstation cheques paid into bank but not yet
cleared.
Cheques issued but yet not presented for payment
Cheques received and entered in the bank column
of the cash book but omitted to be paid into bank
Interest on deposit accounts credited in the bank
statement but not entered in the cash book.
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Continued.
Bank charges and interest on overdraft
debited in the bank statement but not
recorded in the cash book.
Dishonoured bills and cheques debited in
the bank statement, but yet not brought into
account in the cash book.
Amounts directly paid into bank by debtors
and not yet entered in the cash book.
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Methods For Preparing B.R.S
Addition And Subtraction Method
Debit And Credit Method
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Addition And Subtraction Method
A & S METHOD
ADD: ALL CREDIT ITEMS
SUB: ALL DEBIT ITEMSSUB: ALL CREDIT ITEMS
ADD: ALL DEBIT ITEMS
IN CASE OF CASH BALANCE
IN CASE OF OVERSDRAWN PASS BOOK BALANCE
IN CASE OF PASS BOOK BALANCE
IN CASE OVERDRAWN CASH BOOK
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Format Of The Addition &Subtraction Method
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Explanations:
A credit entry in the cash book decreases the cash
book balance .If there is no corresponding debitentry in the pass book balance. This will make the
pass book balance more than the cash book
balance. Hence the amount credited in the cash
book should be added to the Cash.B.B.
A credit entry in the pass book increases the pass
if there is no corresponding debit entry. Hence theamount credit in the pass book should be added to
equalize the balance.
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Explanations:
A debit entry in the cash book increases the cash
book balance. If there is no corresponding creditentry. Hence the amount debited in the pass book
should be subtracted from the cash book balance .
A debit entry in the pass book decreases the pass
book balance. If there is no corresponding credit
entry in the pass book. Hence, the amount debited
in the pass book should be subtracted from the ashbook balance.
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Debit And Credit Method
Rules for entering Dr&Cr method are:
1. Write the balance as per the cash book/passbook in the appropriate column i.e., debit thebalance in the debit column and credit the
balance in the credit column.
2. Write in the debit column:
Items not debited or debited short either in cashbook or in pass book
Wrong or excess credit either in cash book or inpass book.
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Continued..
3. Write in the credit column:
Items not credited or short credited in cash bookor in pass book
Wrong or excess debits either in cash book or inpass book.
(Add both the column and put the difference
between the two columns in the column with thelesser amount, so as to make the columns agree.The difference represents the bank balance
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Format Of The Debit & Credit Method
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Solution:
