LEDGER AND TRIAL BALANCE

Procedure of Preparing Bank Reconcilliation Statement

A Bank Reconcilliation Statement is prepared when we get the duly completed Pass Book from the Bank. On receiving the Cash Book

1. First of all tally the Debit side entries of the cash book with the Credit side entries of the Pass Book and vice versa.
2. Tick the items appearing in both the book.
3. Unticked items will be the points of differences.
4. A BRS is then prepared by taking either the balance as per Cash Book or Pass Book as a starting point.

Important Points :

1. If the Starting point is Cash Book Balance then the ending point will be Pass Book Balance.
2. If the starting point is Pass Book Balance then the ending point will be the Balance as per Cash Book.
3. Debit Balance as per Cash Book or Credit Balance as per Pass Book, means that the firm has that much amount of deposited at the bank also called favaurable balance write the amount under + item.
4. Credit Balance as per Cash Book or Debit Balance as per Pass Book, means that this much amount has been withdrawn in excess of deposit also called overdraft or unfavourable balance write the amount under - item.

Method of Preparing BRS Starting with by the Balance / overdraft as per Bank Column of Cash Book.

Note :

To get more from less means something is to be added therefore + item & To get less from more, something is to be deducted therefore _ item.

1. First of all write :

Under Plus Item – If the Cash Book Balance is debit or favourable or simple balance.
Under Minus Item – If the Credit Balance or overdraft as per Cash Book is given.

2. Now study the point of difference.

(a) If the entry is done in the Cash Book and not in the Pass Book then .

(i) if it is done on the debit side of Cash Book, Balance in the Cash Book will be more as compared to Pass Book and hence the item will be – item as shown in the box above.
(ii) where as if the entry is done on the Credit side of Cash Book, the Balance in the Cash Book will be less as compared to Pass Book and hence the item will be + item.

(b) If the entry is done in the Pass Book and not in the Cash Book then.

(i) if done on the Credit side of Pass Book– Pass Book Balance is more as compared to Cash Book – item.
(ii) It it is done on the Debit side of Pass Book– Pass Book Balance is less as compared to Cash Book (–) item

3. At the end + items and - items are totalled.

(a) If total of Plus Items is more than the total of (-) items Difference is Cr Balance or favourable balance as per Pass Book.

(b) Where as if the - items total is more than the + items total Difference is Dr Balance or overdraft as per Pass Book. Balance or overdraft as per Pass Book.

Ready Reference

+ Items (Items which increases the Pass Book Balances or decreases the Cash Book Balance)

1. Cheques issued but not yet presented.
2. Credits made by the bank for Interest.
3. Amount directly deposited by the customers in our bank A/c.
4. Interest and dividend callected by the bank.
5. Cheques paid into the bank but omitted to be recorded in the Cash Book.

 

CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari ) 
Email Id : [email protected]