Bank Reconciliation Statement

Direct bank charges

Bank charges can be directly debited by the bank without immediate notification to the account holder, causing differences in balances.

It creates a difference in bank balances

When a cheque is deposited but not yet collected, it causes a temporary difference between the cash book and passbook balances.

When withdrawals exceed account balance

An overdraft occurs when more money is withdrawn from an account than the available balance, essentially creating a negative balance.

To credit interest or collected dividends

Banks can directly credit accounts for reasons like interest earnings or dividend collections without prior notification.