Bank Statement and Bank Reconciliation Statement

What is a Bank Statement?

A bank statement is a document issued by a bank that summarizes all the transactions in an account over a specific period. It includes deposits, withdrawals, checks cleared, service charges, and the ending balance.

What information does a Bank Statement contain?

A bank statement typically includes:

• Account holder’s name and address
• Account number
• Statement period dates
• Starting balance
• Detailed list of deposits and withdrawals
• Ending balance
• Bank fees and interest earned

What is a Bank Reconciliation Statement?

A bank reconciliation statement is a document that compares the bank statement with the company’s accounting records. It ensures that the balances match and identifies any discrepancies.

Why is Bank Reconciliation important?

Bank reconciliation is important because it helps to:

• Detect errors and fraudulent transactions
• Ensure accurate financial records
• Identify unrecorded transactions
• Maintain proper cash management

How do bank fees and charges affect reconciliation?

Bank fees and charges must be recorded in the company’s books during reconciliation. They usually appear on the bank statement and need to be adjusted in your accounting records to match the bank balance.

A Bank Statement and a Bank Reconciliation Statement are often considered as same. But there are differences between them. A Bank Pass Book is the true copy of the account of the customer in the books of the bank, whereas a Bank Reconciliation Statement is a statement prepared mainly to reconcile the differences between the ‘Bank Balance’ shown by the Cash Book and Bank Pass Book.