A Bank reconciliation is a process
that explains the difference between the bank balance shown in an organisation's bank statement, as supplied by the bank, and the corresponding
amount shown in the organisation's own accounting records at a particular
point in time.
1. That our banker might have allowed interest which have not yet been entered in our cash book.
2. That our banker might have debited our account for any such item as interest on overdraft,
commission for collecting cheque, incidental charges etc., which we have not entered in the
cash book.
3. That some of the cheque which we drew and for which we credited our bank account prior to
the date of closing, were not presented at the bank and therefore, not debited in the
bank statement.
4. That some cheques or drafts which we have paid into bank for collection and for which we
debited our bank account, were not realised within the due date of closing and therefore,
not credited by the bank.
5. The banker might have credited our account with amount of a bill of exchange or any other
direct payment into bank and the same may not have been entered in the cash book.
6. That cheques dishonoured might have been debited in the bank statement but have
not been given effect to in our books.
To prepare the bank reconciliation statement, the following rules may be useful for the students:
1. Check the cash book receipts and payments against the bank statement.
2. Items not ticked on either side of the cash book will represent those which have not yet passed
through the bank statement.
3. Make a list of these items.
4. Items not ticked on either side of the bank statement will represent those which have not yet
been passed through the cash book.
5. Make a list of these items.
6. Adjust the cash book by recording therein those items which do not appear in it but which are
found in the bank statement, thus computing the correct balance of the cash book.
Causes
of Disagreement Between Bank statement and Cash book:
1. That our banker might have allowed interest which have not yet been entered in our cash book.
2. That our banker might have debited our account for any such item as interest on overdraft,
commission for collecting cheque, incidental charges etc., which we have not entered in the
cash book.
3. That some of the cheque which we drew and for which we credited our bank account prior to
the date of closing, were not presented at the bank and therefore, not debited in the
bank statement.
4. That some cheques or drafts which we have paid into bank for collection and for which we
debited our bank account, were not realised within the due date of closing and therefore,
not credited by the bank.
5. The banker might have credited our account with amount of a bill of exchange or any other
direct payment into bank and the same may not have been entered in the cash book.
6. That cheques dishonoured might have been debited in the bank statement but have
not been given effect to in our books.
How to
Prepare a Bank Reconciliation Statement:
To prepare the bank reconciliation statement, the following rules may be useful for the students:
1. Check the cash book receipts and payments against the bank statement.
2. Items not ticked on either side of the cash book will represent those which have not yet passed
through the bank statement.
3. Make a list of these items.
4. Items not ticked on either side of the bank statement will represent those which have not yet
been passed through the cash book.
5. Make a list of these items.
6. Adjust the cash book by recording therein those items which do not appear in it but which are
found in the bank statement, thus computing the correct balance of the cash book.
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