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4 A AFME Bank Reconciliation Statement
What is a Bank Reconciliation Statement (BRS)?
A BRS is a statement prepared to reconcile the difference between the balance as per the cash book maintained by the entity and the balance as per the bank passbook or bank statement on a particular date.
What is the accounting principle underlying the preparation of a BRS?
It reconciles two independent records of the same bank transactions.
Why does a difference arise between the cash book balance and the passbook balance?
Differences arise due to timing differences such as cheques issued but not yet presented for payment, cheques deposited but not yet collected, bank charges debited by the bank but not yet recorded in the cash book, and interest credited by the bank but not yet entered in the cash book.
Which balance is generally taken as the starting point in a standard BRS format?
Either the cash book balance or the passbook balance.
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