What is a Bank Reconciliation Statement?

A statement prepared by the account holder on a particular date (any date of the year) to reconcile the Bank Balance as per the Cash Book(record of the account holder) with the balance as per Bank Statement or Bank Pass Book (record of the bank) showing entries that are reasons for the difference between the two balances is known as Bank Reconciliation Statement.

According to Patil, “Bank Reconciliation Statement is a statement prepared mainly to reconcile the difference between the ‘Bank Balance’ shown by the Cash Book and Bank Pass Book.”

Preparing a Bank Reconciliation Statement is important because of the following reason:

1. The errors or omissions that may have been committed either on the part of the customer or the bank can be located and errors so detected can be rectified with the help of a Bank Reconciliation Statement.
2. The customer becomes sure of the correctness of the bank balance shown by the cash book by preparing a Bank Reconciliation Statement, which helps in making further transactions with the bank.
3. A revised Cash Book can be easily made with the help of a Bank Reconciliation Statement.
4. The chances of embezzlement by the staff are reduced as there is periodic preparation of Bank Reconciliation Statement.
5. Unnecessary delay in the collection of cheques by the bank is revealed with the help of Bank Reconciliation Statement.
6. It keeps a track of cheques that have been sent to the bank for collection.

Also Read:

• Bank Reconciliation Statement (BRS) | Full Form of BRS and Need of BRS
• How to Prepare Bank Reconciliation Statement (BRS) ? | Purpose of BRS with Example
• Preparation of BRS without correcting Cash Book
• Bank Reconciliation Statement (BRS) : Without Correcting Cash Book
• Preparation of Bank Reconciliation Statement with Amended Cash Book
• Bank Reconciliation Statement (BRS): When Extracts from Cash Book and Pass Book are given

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.