Bank Reconciliation With Examples | Reason | Importance | Prepared By


What is Bank Reconciliation Statement ?

In Accounting, an Organization’s Money has to remember the cash information to check upon other accounts. To Shield this basic and enticing resource, an Organization’s present goal is too inward power over its money.

These controls involve isolating the accounting obligation of its workers, keeping all receipts into the organization’s financial records, taking care of all bills through the financial records, and having an autonomous individual regularly set up bank reconciliation and that’s just the beginning.

What is Bank Reconciliation with Examples | Reason | Importance | Prepared By | Types of Bank Reconciliation

All in all, BRS is an explanation that is ready for accommodating the distinction between balance according to the money books bank section and passbook on a given date.

Reason for Preparing Bank Reconciliation

It’s not necessary to set up a BRS and there’s no fixed date for getting ready BRS. BRS is set up on a periodic basis for watching bank related exchanges and thus they are being recorded appropriately in the money books bank segment.

Types of Bank Reconciliation Statement


The Reconciliation Statement can be Set up in 2 ways :

1. Reporting of Bank Reconciliation Without Changing the money book balance.

2. Recording of Bank Reconciliation after changing the money book balance.

Steps to Prepare Bank Reconciliation Statement : 

• To Start with, the date on which the statement is recorded is referenced.


• After which the balance is showed in the account is referenced. As the balance referenced in the passbook can likewise be referenced.


• The saved cheques which are not gathered are deducted.


• At that point, the cheques, the saved installment are summed up and Straightforwardly noted in recorded.


• Every one of the exchanges like the sum charged by the bank yet not recorded in the money book, cheques, and bills are deducted.


• Every one of the credits and benefits gathered by the organization saved in the bank is added.


• Changes of mistakes are made.


Bank Reconciliation Procedure

Bank Reconciliation Statement is Prepared by the Organization and thus this BRS system accept that you are making the bank reconciliation in an accounting programming package, which makes the reconciliation cycle simpler : 


• Enter the Bank Reconciliation (BR) programming module. A posting of uncleared Cheque and will show up.


• Verify-in the BR module that is recorded on the bank articulation.


• Verify-in the BR module all cheques that are recorded on the bank articulation.


• Enter all costs of bank charges showing up on the Bank proclamation, and which have not been recorded in the Organization’s records.


• Enter the ending balance. On the off chance that the book and bank balance match, post all progression recorded in the BR and close the module.


• Assuming the equilibrium don’t coordinate, keep checking on the bank reconciliation for extra accommodating things.


But before moving ahead let us look at some examples of Bank Reconciliation to hold a better understanding.

Also Read 

Bank Reconciliation With Examples

Let us look at this Examples to know about it in brief.

Wright Inc. has a total in a Passbook of $10,000 as of 31st December 2018. These are different details : 
• Three Cheques of $2,000 , $1,500 and $2,500 were recorded in the bank on 30th December 2018 but it was recorded in the book in the year 2019 January.
• A cheque of $500 gave on 31st December 2018 was not introduced for installment.
• A profit of $1,000 on stocks was created in Bank account, yet not recorded in Cash Book.
• An immediate deposit of $400 was made in Bank Account by a client, which was not recorded in Cash Book.
• Bank charges of $100 were entered in Bank Passbook.
• The Balance according to Cash Book on 31st December 2018 was in total $14,200.

Preparing Bank Reconciliation Statement

BRS includes the way toward recognising the exchanges exclusively and match it with the bank articulation to such an extent that the end equilibrium of banks in books matches with the bank explanation.
For one which isn’t coordinated, appropriate changes or adjustment will be done in the book to coordinate with it.

Importance of Bank Reconciliation


1. Using software associated with accounting will assist you with setting up a bank reconciliation naturally.


2. It saves time. No matter what if there are 50 or 500 exchanges, the efforts and the time to accommodate is something very similar, thus you will save a great time and exertion included accommodating the bank exchanges.


3. Identifying exchanges is simpler : Get to know about the New transactions that are not based directly on your accounts like bank charges or bank interest and so on.


4. Identifying mistake : A Bank Reconciliation helps you in spotting any mistakes that are associated with your business. These slips incorporate issues like deduction, missed installments, and twofold installments.


5. Recognising Fraud : Bank Reconciliation helps you in recognising and spotting exchanges that are not done by you. It is very much accurate to keep you up with the individuals in your organization and thus keeping them away from any fraud transactions.


The Direct Proof With Cash


Numerous Organization’s set up Bank Reconciliation actually like that represented. But, imagine a scenario where the Bank Reconciliation incorporated a $5,000 Cheques to a worker close to the start of the month and a $5,000 store by that representative at the end of the month then these sums were not recorded on the organization records.


All in all, the representative has to take out an unapproved “advance” for some time. The bank reconciliation would not uncover this unapproved action because the consummation adjust are right. To defeat this inadequacy, a few Organization’s will accommodate the start and end adjustments.


On the off chance that an issue exists, the sums on the Bank Reconciliation will surpass the aggregate per the Organization records for the receipts. This additional Bank Reconciliation Strategy is named proof of money. It is strongly suggested where the volume of exchanges and the measure of cash included is in the large amount.




Every one of the Organization’s may seem to have cash but it is illusionary because there are various cheques “gliding” about that will hit and lessen the records. 

That is the reason one will regularly see a bank. Such limitations are planned to set sure that an installment goes through with the bank on which it is drawn before delivering those assets.


If you complete the Bank Reconciliation at the mouth-end, print the Bank Reconciliation report and record it in the month-to-mouth diary sections. This gives the inspectors Prepared admittance to the data if they need to look at the Bank Reconciliation sometime in the Future.

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