Bank Reconciliation Statement — Flashcards

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A Bank Reconciliation Statement is a statement prepared to reconcile the difference between the bank balance shown in the cash book and the pass book on a particular date. It helps identify the reason…

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It is necessary because the cash book and pass book often show different balances due to timing differences or errors. The BRS identifies causes like unpresented cheques, uncollected deposits, bank ch…

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The two main books are: (1) Cash Book – maintained by the business, where all bank deposits and withdrawals are recorded; (2) Pass Book – maintained by the bank, which records all transactions in the …

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A favourable balance means the business has more deposits than withdrawals, resulting in a positive balance. In the cash book, it's a debit balance; in the pass book, it's a credit balance. An unfavou…

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When a business issues a cheque to a creditor, it records the payment immediately in the cash book, reducing the bank balance. However, the bank only deducts the amount when the cheque is presented fo…

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When a business deposits a cheque, it records the amount in the debit side of the bank column in the cash book, increasing the balance. But the bank only credits the account after the cheque is cleare…

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The bank immediately credits the firm’s account, increasing the pass book balance. However, since the business is not informed instantly, it doesn’t record the transaction in the cash book. This cause…

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Banks deduct charges like service fees, overdraft interest, or insurance premiums without informing the customer immediately. These are debited in the pass book but not recorded in the cash book until…