google_ad_client = "pub-1416747337565286"; Performing a bank reconciliation results in improved internal control over the company's cash if the reconciliation is done by someone other than the person handling and/or recording receipts and payments. (deposited) Balance Balance b/f 10,000(cr.) In a large business concern all the receipts and payments are made through bank. 4. Further details are as follows: 1. Importance of the Bank Reconciliation Statement can be understood with the following points: 1. ch_height = "auto"; The bank reconciliation statement helps to check the correctness of the entries recorded in the books of accounts and thereby, ensures the accuracy of bank balances. To be more precise, these are some of the reasons why we prepare BRS. Whereas balance in the Pass Book remains `10,000 until the cheque is presented for payment. google_ad_format = "160x600_as"; View Question_BR.docx from BUSINESS 214 at Uni. Reconciling your bank account each month allows you to notice if your financial institution makes a mistake when entering and processing each transaction. If bank reconciliation statement is prepared with the favourable balance of cash book (i.e., debit balance of cash book) or unfavourable balance/overdraft balance of cash book (i.e., credit balance of cash book), the impact of all transactions on the pass book shall be examined. Bank Reconciliation. google_ad_width = 160; What are the reasons to prepare a bank reconciliation statement? Detect fault: If there has been an error by the accountant while preparing cash book or by the bank, while preparing the customer’s account in its book, they … Items missing from the cash book will not have been recorded in other ledger accounts and the business records will be unreliable, To discover bank errors ( bank personnel  too make mistake!! It would act as a moral check on employees so that they do not indulge in the embezzlement of bank cheques, which would ultimately cause loss to the firm. You should be aware that financial discipline is at the heart of every successful business. A cheque of $300 was deposited, but not collected by the bank. google_color_bg = "FFFFFF"; In the reconciliation statement, your Bank Book entries are compared to the Bank Statement. ch_color_text = "#000000"; BANK RECONCILIATION STATEMENT 3.5 Bank statement (pass book) Date Particulars Dr. (withdrawn) Cr. Explain some reasons for preparing Bank Reconciliation statement To detect items not entered and errors in the cash book To ensure that the cash book entries are complete. The reasons for us to prepare Bank Reconciliation statement are as follows: To detect items not entered and errors in the cash book, To ensure that the cash book entries are complete. google_ad_height = 600; This offer is not available to existing subscribers. This is because the bank r… The bank statement records all the bank's transactions with the business. In bank reconciliation, the bank statement balance is reconciled, with the book bank account balance in the client’s books of accounts, resulting to the tallying of the two balances, where the calculated adjusted bank balance should be equal to the figure of the adjusted book bank balance. 4. ), To monitor “stale” cheques ( those cheques which have not been banked by the payee within the  local banking law of six (6) months, and finally to check on fraud and embezzlement. Why Bank Reconciliation is Important Bank reconciliation is the procedure of comparing and matching figures from the accounting records against those shown on a bank statement. ch_type = "mpu"; A bank reconciliation is used to compare your records to those of your bank, to see if there are any differences between these two sets of records for your cash transactions.The ending balance of your version of the cash records is known as the book balance, while the bank's version is called the bank balance.It is extremely common for there to be differences between the two balances, … Related Articles: Preparing Bank Reconciliation Statement: From Cash Book and Pass Book ; Preparation of Bank Reconciliation Statement ; Difference between Bill … Balance the accounts in both the books. With the sheer number of transactions a financial institution processes in a day, occasionally a mistake may happen. The reasons are obvious. google_color_text = "333333"; 6,000 (ii) Interest on overdraft for six months ending March 31 st, 2017 Rs. Markson’s & Co. has a balance as per pass book of $1,000 as on 31st March 2019. Bank charges of $50 were recorded in Passbook, but not in Cash Book. For this purpose, we prepare the Bank reconciliation statement. Example 1: From the following particulars prepare a Bank Reconciliation Statement to find out the causes in two balances as on March 31 st, 2017 for Abdullah Khan (Pvt.) ch_sid = "Chitika Default";