07-01-2017, 08:52 PM
MGT101 Financial Accounting - bank reconciliation statement easy notes by Zahid mehboob.
BANK RECONCILIATION STATEMENT
· Any discrepancy between the balance of cash book and that of pass book, the depositor prepares a statement to explain the causes of discrepancies and to reconcile the two balances. This statement of explanation is called bank reconciliation statement.
· Pass book is written by bank
· Cashbook is written by account holder
You have to remember only one word
NPBC =NORMAL PASS BOOK BALANCE CREDIT
The rest will be
NORMAL CASH BOOK BALANCE DEBIT
OVERDRAFT PASS BOOK BALANCE DEBIT
OVERDRAFT CASH BOOK BALANCE CREDIT
There are only 5 things which use in bank reconciliation statement
1. Unpresented cheque
The unpresented cheque is cheque issued for payment to some one but not presented in bank for withdrawal . it is also written as Checks issued but not yet paid by the bank
Example: if you have a bank account and you issued a cheque to me and I doesn't present cheque in bank before the date of bank reconciliation statement.
It mean than you less such amount in your book but actually such amount is not deducted from your account so you will debit such amount in BRS
2. UNCREDITED CHEQUE \UNCOLLECTED CHEQUE
The cheque which paid by someone and dishonored by bank due to any reason is called uncredited cheque. It is also written as Cheques deposited but not yet collected by the bank
If I give you a cheque and you send this cheque to bank but it’s not collected by bank due to any reason
You add such amount in your book but such amount is not added in you account so you credit such amount to remove the difference in cash book and pass book
3. WRONGLY DEBITED AND WRONGLY CREDITED
If bank or customer wrongly debit or wrongly credit some amount from your account so yo can pass opposite effect entry
Wrongly debited = credit
Wrongly credit = debit
4. BANK CHARGES
If bank deducted any charges for any any service from your account then you should credit such amount
It written as Bank charges debited in pass book
5. DIRECTLY DEPOSITS \ BANK COLLECT ANY AMOUNT ON YOUR BEHALF
If a customer or your friend directly deposit some amount in your account or bank bank collect any amount on your behalf ( dividend collected , rent collection etc) it mean increase of amount in your account and you have no knowledge of such amount.
So you should credit such amount.
Summary of BRS· Normal pass book balance credit
· Normal cash book balance debit
· Overdraft pass book balance debit
· Overdraft cash book balance credit
Only 5 main things use in BRS
1. Unpresented cheque /cheque issue but not collected (debit)
2. Uncredited cheque/committed cheque /dishonoured cheque/uncollected cheque (credit)
3. Wrongly debited (credit) /wrongly credit (debit)
4. Directly deposit /bank collection on your behalf (debit)
5. Bank charges/ bank paid amount on your behalf (credit)
Download attached file for format.
Main things to remember
Only debit will add in debit and credit will add in credit
Debit will subtracted from credit vice versa
If opening balance is normal cash book then closing will normal pass book balance vice versa if not negativeIf opening balance is overdraft cash book balance then closing will overdraft pass book if not negative vice versa
For any questions post below or directly contact me