Definition of Bank Reconciliation Statement: Bank reconciliation is a evaluation between the cash point recorded on an entity’s books as well as the situation noted on the dealings of its bank. Or the process of comparison that figure/ amount within the Cash account balance in the general ledger to the amounts/figures appearing on the (BS) bank statement.
Generally resulting in a few changes to the book balance to account for transactions that are recorded on the bank’s records (report) except not the entity’s, such as bank fees as well as interest income. The purpose is to be sure that there is reliability between the amounts/balance as well as that the company’s amounts are perfect with complete.
Bank Reconciliation Statement in (BRS)
You must require to the subsequent statements for procedure the Bank Reconciliation Statement (BRS).
1) Company’s/Org. bank accounts.
2) Banker’s/Bank statement.
The Bank Reconciliation Statement (BRS) is a compare the Company’s bank account along with the (BS) Banker’s statement. Several Times Company’s/organization’s bank account balance does not equal to the Banker’s account balance. So at first you must need to discover/find the difference/dissimilarities between the 2(two) accounts.
Generally there are 3(three) types of causes you can find/locate for differences between Company’s bank account as well as Bankers statement.
a) First one is: If you issue a cheque to a client/party, however the client/party not presented the cheque the same or equal date and not clear the cheque the same date.
b) Second one is: Similarly just reverse if you have received a cheque plus presented/shown into bank, but this cheque not clear the same/equal date.
c) Third one is: From Bank account bank charges debited(deducted) by bank, but this transaction/deal are not entered/presented the same date in the company’s account balance.
Basically, above mentioned reasons are the most important causes; as a result Company’s bank account balance does not usually match to the Banker’s/Banks account balance.
In this ground you have to Reconciliation Company’s bank book along with the banker’s book to make equal the dissimilarity.