Tag: bank reconciliation statement

Overdraft facility means that the customer is allowed to withdraw money from his bank account even when the balance is zero. However, this does not affect the way in which the cheques deposited but not cleared are recorded in the cash book. Cheques deposited but not cleared are debited in the cash book (bank column). Thus, even in the case of an enterprise having overdraft facility, the bank reconciliation statement treats all the cheques deposited but not cleared as added.

Base of a reconciliation statement can either be as per cash book or bank pass book since balances of both the books are considered to know the final balance available with the business.

A bank reconciliation statement is prepared using cash book which is prepared by the business and passbook which is prepared by the bank. When the balances of these two books are compared and reconciled, the credibility of the balances is established. Since the business prepares the cash book and the bank reconciliation statement and the passbook is prepared by the bank, the business is able to establish the credibility of the balance as per pass book which is not prepared by the business, on the basis of cash book while preparing bank reconciliation statement, which are prepared by it.

A bank reconciliation statement is a statement prepared by the business to reconcile the differences in balance as per bank column in the cash book and bank balances as per pass book (bank statement). The passbook is a copy of the customer's account with the bank and it is prepared by the bank. On the other hand, cash book is prepared by the business and bank column of cash book shows all those transactions of the business which are carried out through the bank account. So it is often, that there are differences between these two balances as they are prepared by different entities with different viewpoints which is why bank reconciliation statement is required to Reconcile these differences.

In case of deposits in transit the entry for would have been entered in the cash book due to which the cash book balance would be higher than the pass book balance.

A bank reconciliation statement is prepared to show reconciliation of balances as per cash book and passbook by identifying the causes of differences between the two. It is prepared by the book keeper/ company accountant/ businessman/ customer as it is the responsibility of the business to present a true and fair picture of its books of accounts to its various stakeholders.

A bank reconciliation statement is a statement prepared by the account holder to reconcile the differences arising between the bank balances as per pass book and the cash book.

A bank reconciliation statement is prepared by the one who holds an account in the bank. A bank will never prepare a bank reconciliation statement but only provides with the summary of transactions undertaken by the account holder during a given period in form of a bank pass book.

Bank reconciliation statement is prepared by p'ship firms, sole traders and companies i.e ones which have businesses.