Bank Reconciliation Statement AFTERSCHO ☻ OL – DEVELOPING CHANGE MAKERS CENTRE FOR SOCIAL ENTREPRENEURSHIP PGPSE PROGRAMME – World’ Most Comprehensive programme in social entrepreneurship & spiritual entrepreneurship OPEN FOR ALL FREE FOR ALL www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS
Bank Reconciliation Statement Dr. T.K. Jain. AFTERSCHO ☺ OL Centre for social entrepreneurship Bikaner M: 9414430763 [email_address] www.afterschool.tk , www.afterschoool.tk www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS
There are differences between bank balance as per pass book and as per the bank account maintained by the firm. These differences are due to many reasons. Bank reconsiliation statement is an attempt to identify the reasons of these differences and take remedial actions whereever necessary.
Reasons for differences between bank pass book and bank account maintained by the firm…
Cheque issued but not deposited by the customers
Cheque deposited in the bank, but not yet cleared
Direct payment by bank as per standing instructions
Penalties / charges / interest levied by bank without intimation to the firm.
Wrong posting / wrong entry
If you deposit a cheque of Rs. 10000 in the firm XYZ’s account, but the bank gives no intimation to the firm. What will be the impact?
The balance as per pass book will be more than the balance as per personal account of bank maintained by the firm.
Add Rs. 10000 in the bank account of the firm and thus the two balance will be equal.
Cheques issued but not yet presented for payment
The balance as per bank account maintained by the firm will be reduced by the amount of cheue (but the cheque has not yet been presented in the bank).
Thus in order to rectify the situation, we have to add back this amount in the bank stateemnt or
Interest allowed by the bank – what will be the impact…
When bank allows interest – the pass book balance increases, but the firm comes to know about it much later so the balance as per the accounts of the firm remain unaltered. In order to reconcile, you have to add this amount in the balance from the firm’s bank account.
In this case the bank balance as per bank pass book will increase – as customers have deposited some money directly. In this case there will be difference in the two balances and in order to reconcile, please add this amount in the balance as per bank account of the firm.
Bank has received this money on behalf of the firm (without intimation to the firm). There will be difference in the accounts. Thus to reconcile, add this amount in the balance as per bank account of the firm.
The balance in the bank pass book will increase – so in order to reconcile, add this amount in the bank account of the firm. (so add this).
Rebate on bills retired under rebate through the bank but full amount entered in the cash book -
The firm has received some rebate on the bills – the firm had given instructions to the bank to make the payment as per the bill amount, but due to rebate, the bank had to pay less. Thus in order to reconcile, add this rebate amount in the balance of bank account of the firm.
The balance of bank pass book has increased due to wrong entry. Rectify this entry with the bank. Till it is rectified, add this amount in the bank reconciliation statement to the bank balance account of the firm, so that the two balances are tallied.
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