Purpose & Benefits of preparation of BRS*

By Amrit Raj

Index

What is Bank Reconciliation Statement

Purpose /Importance of preparation of Bank

Reconciliation Statement Reasons for Differences in Bank Pass Book and Cash

Book

Practical Points/Benefits of Preparation of Bank

Reconciliation statement

Steps to Reconcile Bank Statement

There should be no difference between Cash book and Pass Book.

There exists however a difference between the closing balances of Our Cash Flow and Bank Statement (Bank Pass Book) on a particular date due to certain Reasons**

The process of Bank Reconciliation gives an actual position of the business. It is an effort to point out the reasons for non agreement.

What is Bank Reconciliation Statement

To Prevent and Track :

Errors Which may have been committed

Undue Delay in Clearance of Cheques

Discourages Staff from Embezzlement

Purpose/Importance for Preparation for Bank Reconciliation Statement

Reasons for Differences in Bank Pass Book and Cash Book

Timing Differences *Cheque Issued but not presented *Cheques paid into bank but not presented *Bills collected by bank on behalf of the customer *Direct Payment by BankDue to Errors in Recording the entries.

Example :

Regular and timely reconciliation ensures following :

Any Bounced Cheque can be tracked and followed up with the client.If any extra charge has been credited in the pass book it can be inquired in time and included in the books of account.

Practical Points/Benefits of Preparation of Bank Reconciliation statement

Check Bank statement and Cash Book to identify the items which have been omitted.

Prepare the bank reconciliation statement.

Steps to Reconcile Bank Statement

The End