Bank reconciliation statement
Bank reconciliation statement refers to the summary of the banking and business activities that reconcile an entity’s bank account with its financial transactions.
This statement records deposit, withdrawals and other financial activities affecting a bank account for a certain period of time.
Bank reconciliation statement helps to maintain transparency in financial transactions occurred between banks and the customers.
Reasons to prepare bank reconciliation statement
For checking bank related transactions are recorded properly or not.
For detecting and preventing accounting errors while recording transactions.
It is compulsory to prepare statement to maintain transparency to gain customers’ trust.
For tracking interest rate and fee or penalties on your account.
For detecting and preventing frauds in near future.
For identifying entities for receipts which you didn’t deposit.
For identifying valid transactions recorded by one party but not by the other.
Methods of preparing BRS
Compare the opening balance of both the bank column of the cash book as well as the bank statement.
Compare the credit side of the bank statement to the debit side of the bank statement.
Analyze entries in the bank column of the cash book as well as in checkbook.
Calculate the balance after revising the updated cash book’s bank column. Prepare bank reconciliation statement accordingly.
Add UN presented cheques and deduct UN credited cheques.
Make all the final adjustments and check for bank error Result of cash book and bank statement must be equal.
Preparing bank reconciliation statements helps banks and financial institution to maintain transparency in financial transactions and detect accounting errors and frauds and prevent them to conduct healthy financial transactions.
