BANK RECONCILIATION STATEMENT
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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 account holder and the balance as per the bank passbook or bank statement on a given date.
What is the meaning of 'balance as per cash book' in BRS?
The closing balance of bank column in the company's cash book.
Why does a difference arise between the cash book balance and the passbook balance?
Differences arise due to timing differences such as uncollected cheques, unpresented cheques, bank charges not yet recorded, interest credited by the bank, or errors in either book.
What is the meaning of 'balance as per passbook' in BRS?
The closing balance shown in the bank-issued passbook or statement.
What are unpresented cheques in the context of BRS?
Unpresented cheques are cheques issued by the account holder and recorded in the cash book but not yet presented to the bank for payment, causing the cash book balance to be lower than the passbook balance.
When should a bank reconciliation statement ideally be prepared?
At the end of every month or accounting period.
What are uncredited cheques in the context of BRS?
Uncredited cheques are cheques deposited by the account holder and recorded in the cash book but not yet collected or credited by the bank, causing the passbook balance to be lower than the cash book balance.
What are 'outstanding cheques' in BRS terminology?
Cheques issued but not yet presented to the bank for payment.
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