1. BANK RECONCILIATION STATEMENT
By Shashwat Betala

2. CONTENT The purpose of a bank reconciliation statement.
The definition of a bank reconciliation statement.
Reasons for difference between the cash book and bank reconciliation statements.
Nature of the cash book and the bank statement
Preparation of bank reconciliation statement
Exercise

3. THE PURPOSE OF THE BANK RECONCILIATION STATEMENT
WHY IS IT PREPARED?
Due to the timing difference, omissions and errors made by the bank or the firm itself , the balances of the bank statement and the bank account in the cash book rarely agree.
WHAT IS IT USED FOR?
Bank reconciliation statements can be used to explain the reasons for the differences and to identify errors and omissions in both cash book and bank statement, so that corrections can be made as soon as possible.

4. The definition of a bank reconciliation statement.
DEFINITION of 'Bank Reconciliation Statement‘:A form that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies. (NOTE AS PER INVESTOPEDIA)

5. REASONS FOR DIFFERENCES BETWEEN THE CASH BOOK AND THE BANK STATEMENT
Uncredited items
They are deposits paid into the bank but occurred too close to the cut-off date of the bank statement and so do not appear on the current statement but appear on the next statement.
Unpresented cheques
They are cheques issued by the firm that have not yet been presented by recipient to the bank for payment.
Standing orders
They are standing instructions from the firm to the bank to make regular payments

6. MORE REASONS Direct debits
They are payments made directly through the bank.
Bank charges
They are charges made by the bank to the company for banking services used.
Dishonored cheques
They are cheques deposited but subsequently returned by the bank due to the failure of the drawer to pay.
Credit transfers
They are collections from customers directly through the bank.
Interest allowed by the bank
They are interest received for deposits or fixed deposits.

7. NATURE OF THE CASH BOOK AND THE BANK STATEMENT.
NATURE OF CASH BOOK
Nature of Bank Statement
The balance in the cash book is an asset to the company , therefore:
The balance as per the bank statement is a liability to the bank , therefore:
Bank Statement
Cash book
Debit represents
decrease
Credit represents
increase
Debit represents increase
Credit represents decrease

8. STEPS NOTE ENTRIES NOT RECORDED IN CASH BOOK BUT IN BANK STATEMENT
WITH THESE ENTRIES UPDATE CASH BOOK
WITH THIS UDATED BALANCE MATCH ENRIES NOT RECORDED IN BANK STATEMENT, IN RECONCILIATON STATEMENT AND VERIFY FINAL AMOUNT WITH BALANCE ON BANK STATEMENT.

9. EXERCISE
A company’s cash book and bank reconciliation statement for 2015 appear as follows: (prepare bank statement)
Cash Book(bank column)
2015
1 Balance b/d
3 Gala Stores 10
Shyam supercomuters 2000
30 Rishi enterprises
7200
2015
Dec 8 Puneeta ltd
20 Uma ltd
29 Didu ltd
31 Balance c/d
7200

10. EXERCISE (CONT) Bank Reconciliation Statement as at 31 December 2015
balance as per cash book
Add Unpresented cheque (RK Advertising)
4900
Less Bank deposit not yet entered on bank statement (1400)
Balance in hand as per Bank Statement

11. THE END!
THANK YOU