Accountancy · Class 11 Commerce

Ch 5Bank Reconciliation Statement — Class 11 Accountancy, concept-first.

Chapter 4 introduced the cash book — a record that serves as both the firm's cash account and its bank account, showing the balance of each at the end of the period. Once the cash book is balanced, the natural next step is to check it against the bank's own records of the firm's transactions.

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Time Lag Causes

Think about this: you and a friend lend money to a small business on the same day. Your friend puts in ₹1,00,000 on 1st April. You put in ₹1,00,000 on 1st January — nine months later.

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Introduction

Chapter 4 introduced the cash book — a record that serves as both the firm's cash account and its bank account, showing the balance of each at the end of the period.

5.1

Need for Reconciliation

When a firm compares the bank balance shown in its own cash book with the balance shown in the bank's passbook (or bank statement), the two figures almost never match on a given date.

5.1.1

Timing Differences

The cash book and the bank passbook are two separate records of the same bank account. The cash book is maintained by the firm and records every transaction the moment the firm knows about it.

5.1.2

Differences Caused by Errors

Not every difference between the cash book and the passbook arises from timing. Sometimes, a mistake has been made — either by the business firm in its own cash book, or by the bank while recording tr…

+Test Your Understandingi1 question

Q1**I.** Read the following transactions and identify the cause of difference on the basis of time gap or errors made by business firm/bank. P…Preview

5.2

Preparation of Bank Reconciliation Statement

Once you have identified all the causes that create a difference between the Cash Book balance and the Pass Book balance, the actual reconciliation can be carried out.

5.2.1

Preparation of Bank Reconciliation Statement without adjusting Cash Book Balance

9 Q

A Bank Reconciliation Statement (BRS) is a statement that explains why the bank balance shown in the cash book differs from the balance shown in the passbook.

+Illustrationsi8 questions

+Test Your Understandingi1 question

Q1Select the Correct Answer: **1.** A bank reconciliation statement is prepared by: (a) Creditors (b) Bank (c) Account holder in a bank (d) De…Preview

+Long Answer Questions3 questions

+Numerical Questions18 questions