PLUS ONE ACCOUNTANCY NOTES CHAPTER 5 Bank Reconciliation Statement Capsule Notes
MEANING & NEED FOR BRS Definition: Statement prepared by customer to explain reasons for difference between Cash Book (bank column) balance and Pass Book (Bank Statement) balance on a given date. Need/Objectives: Identify causes of difference, know correct bank balance, detect errors/frauds, prevent unnecessary overdraft, verify bank's records. CAUSES OF DIFFERENCE A. Timing Differences: Cheques issued but not presented (CB lower). Cheques deposited but not credited (CB higher). Interest/dividend collected by bank (PB higher). Bank charges/interest on overdraft (PB lower). Direct deposit by customer (PB higher). Direct payment by bank (insurance, etc.) (PB lower). Dishonour of cheque/bill (PB lower). B. Errors: In cash book (wrong totalling, omission, double entry) or passbook (rare). PREPARATION RULES When Starting from Cash Book (Favourable) Add (+) Deduct (–) Cheques issued not presented, Interest credited, Direct deposit, Dividend collected Cheques depo...