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Bank Reconciliation Statement Basics Elucidated! Read Now

Bank Reconciliation Statement Basics Elucidated! Read Now

Businesses have a cash book to keep track of their transactions. Also serves as a record for double-checking bank statements. Reconciliation is the process of comparing both records. It examines the errors and records them in the BRS (Bank Reconciliation Statement). In addition, reconciliation is performed once a month to keep the two records in sync. Furthermore, reconciliation reveals the potential discrepancy that, if ignored, may enrich a company. There are numerous issues that arise in a company's cash record that must be addressed. That work is done for it by reconciliation. 

Thus in today’s Blog, Dhanguard will take a closer look at how to prepare a Bank Reconciliation Statement without a hassle. So without any further ado, let’s learn!

How to prepare a Bank Reconciliation Statement?

For a cash account, a bank reconciliation statement is just as important as a bank statement. It keeps track of the adjustments that are required to declare the bank statement and cash book records to be error-free. Furthermore, some random errors may not be restored, such as incorrect data entries. Reconciliation keeps track of all necessary adjustments and aids in the seamless operation of a company. The BRS is a statement that is prepared to reconcile the difference between the cash balance and the amount on the bank statement.

Below mentioned is the detailed process enumerated by our Experts and Dhanguard-

Look for any unpaid dues

To begin, compare the opening balances of both the cash book's bank column and the bank statement. In terms of unpaid dues from the previous month, such as un-presented or un-credited checks, the two can be quite different.

Comparing debit and credit sides

Begin by comparing the credit and debit sides of the bank statement. Comparing the credit and debit sides of the cash book is also a good idea. In both documents, the two must be equal. If you can't detect any errors, check the columns.

Examine for any entries that have been left out

Examine entries in both the cash book and the checkbook's bank column. Examine the bank column of the cash book for any records that have not yet been posted. Make a separate list of all such items and record them in your cash register.

Make Corrections

If there are any inaccuracies in the cash book, correct them.

Revisions to the Entries

After reviewing the bank column of the revised cash book, calculate the balance.

Make Bank reconciliation Statements

Create a Bank Reconciliation Statement based on the information you've gathered. Make certain to include the most recent version of the records.

Subtract Unpresented Cheques from Uncredited Cheques

Unpresented cheques are unknown to banks because the beneficiary does not receive the cheque. It happens when a company forgets to deliver a signed check to the recipient's name.As a result of this circumstance, the cheque amount is added to the bank statement. Uncredited cheques, on the other hand, are checks that have not yet been collected by the intended recipient. These must be subtracted from the total.

Finalize your work

Check for bank errors in the bank statement and firm errors in the cash book, and make any final changes. Firms or banks may make mistakes while recording transactions during busy days. These errors are eliminated as a result of the procedure. In difficult circumstances, reconciliation, despite its fine job, becomes a helping hand (large transaction days).

The left-hand side should be equal to the right-hand side

The outcomes of both records, namely the bank statement and the cash book, must be identical.

Why is Preparing a Bank Reconciliation Statement necessary?

Some of the most essential reasons why it is important to compile a bank reconciliation statement are stated below, among others:


Each month, the bank's passbook and a firm's cash book reflect a specific number, which represents the bank's balance on that date. However, due to a delay in recording the time and period of the same in the respective books, there is a good chance that the balances in the two books will not match on the day of comparison. As a result, after preparing a bank reconciliation statement, one can figure out why and how much the two balances differ. The accountant would benefit from this study in documenting the missing amounts in each book. As a result, after preparing a bank reconciliation statement, the books of accounts would really reflect the firm's honest and fair status.

Check the Entries section

An accountant will be able to identify all entries or amounts that have been recorded improperly in either of the books while preparing a bank reconciliation statement. As a result, preparing a bank reconciliation statement is extremely beneficial, as it will aid in the elimination of any incorrectly reported entries.

Identifying and Correcting Incorrect Entries

If an amount or entry is wrongly entered in both the passbook and the cash book, the accountant will be able to fix those entries to arrive at the correct bank balance amount in the passbook and the cash book.

Renewal of Cash Book 

It is also possible that the cash book will fail to indicate the updated bank balance as of a specific date due to irregularities in posting the amount of entries in the cash book and delays in recording such amounts. When compared to the passbook, an accountant would be able to recognise such entries and immediately record them in the cash book. This would make it easier to rapidly reconcile the balances of both the cash book and the bank book.

Delay Detection

It is possible to find any quantity of cheques that are deposited in the bank but are not credited due to the preparation of bank reconciliation statements. This difference would be obvious since the amount of such a deposit would appear in the cash book but not in the bank book, resulting in a disparity in both bank balances. Cheques that have been deposited but not yet cashed can be immediately discovered.

Help in Keeping a Check on Dishonest Practices

There are various advantages to preparing a regular bank reconciliation statement. It would operate as a moral check on employees, preventing them from embezzling bank checks, which would result in a loss to the company. This is because even a low-value check that has been accepted but not deposited can be detected. A bank reconciliation statement plays a significant purpose for a company's accounting cycle and individuals in this way.


You should have a good grasp of how to produce a bank reconciliation statement after reading this article. Above all, the goal is to boost a company's productivity. Due to substantial losses, the majority of firms were forced to close. The head investor can find potential inaccuracies by reconciling the accounts. In addition, reconciliation tracks key transactions that were previously overlooked. The entire purpose of the procedure is to double-check the bank statement and the cash book.Connect with Dhanguard and get a best guidance on Bank Reconciliation Statement.

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