Q.A bank reconciliation statement is prepared with the help of :

When money is withdrawn, the bank debits the customer's account — option (b).

The banker's point of view

• When a customer keeps money in the bank, the bank owes that money to the customer — the customer is a creditor and his account has a credit balance in the bank's books.
• On a withdrawal, the bank pays money out, so its liability to the customer decreases. A decrease in a liability is recorded by a debit, so the bank debits the customer's account. …

A bank statement is a copy of the customer's account as maintained in the bank's own books.

The bank maintains an account for each customer in its ledger. A bank statement (pass book) is a copy of that account supplied to the customer, showing all deposits (credits), withdrawals (debits) and the running balance from the bank's point of view.

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The Bank Reconciliation Statement is prepared by the business to reconcile its cash book balance with the bank statement balance.

A Bank Reconciliation Statement (BRS) explains the causes of difference between the bank balance as per the cash book (maintained by the business) and the bank balance as per the pass book/bank statement (maintained by the bank).

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A BRS is prepared using both the bank statement and the bank column of the cash book, so the answer is (a).

A bank reconciliation statement (BRS) is drawn up to reconcile — and explain the reasons for — the difference between two balances of the same bank account: the balance as per the bank column of the cash book (the firm's own record) and the balance as per the bank statement/pass book (the bank's record).

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