BRS means analysis and adjustment difference between the
cash shown on a bank statement, and the amount shown in the
account holder's records. This matching process involves
making allowances for the cheques issued but not yet
presented, and cheques deposited but not yet cleared or
crideted. And, if discrepancies persist, finding the cause
and bringing the records into agreement
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Bank reconciliation statement tells the reason why your cash books bank column is not matching with your bank pass book .For making bank reconciliation statement , if you have deemed balance of cash book as base the see bank account and if the bank accountant has not passed any voucher entry then all entries must have to be according to our bank pass book for this I am doing some practical example solve
+ -
Bank as per cash book xxxxx -
1st Event
Add cheque issue but not yet
Presented
( It means bank Accountant
Has not passed entry of payment xxxx -
2nd Event
Less Cheque deposit but not cleared
By bank ( It means our balance is
Not increased in bank account , so
We should also see it and less from
Our cash book balance ) xxxx
3rd Event
Less Bank charges debited by bank but
Not recorded in cash book
( It means bank decreased our balance
For their expense so we should also less
These bank charges ) xxxx
4th Event
Add
Dividend collected by bank credited in pass
Book ( It means bank increased our balance
But we have no contact , so when we get this
Information from our pass book, we should
Add in our cash book balance) xxxx
5th Event
Less
Insurance premium paid by bank
( Because , we have given the order to bank
That he can pay directly , so bank paid and
Our balance is decreased , so we should
Also less our balance) xxxx
6th Event
Less
Customer 's cheque dishonoured by bank not recorded
in cash book xxxx
7th Event
Add
Wrong Credit Given by bank
It means bank has increased our bank balance
so for matching our cash book we must add this amount
in our cash book bank column xxxx
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1) The periodical statement sent by the Bank to Customer is called
a) Ledger Statement b) Bank Statement
c) Cash Book Balance d) Trail Balance
2) Debit balance as per the pass book balance means
a) Favorable balance as per Pass Book
b) Unfavorable balance as per Pass Book
c) Positive balance as per Pass Book
d) Balance as per Cash Book
3) Cheque issued by the Account holder to the supplier, not yet presented in the bank
will result in
a) Higher balance as per cash book
b) Lower balance as per cash book
c) Equal balance in cash book & pass book
d) Lower balance as per pass book
4) If a Cheque is deposited in the Bank, not yet collected by the bank, the pass book will show _______ balance as compared to the cash book
a) Lower b) Higher
c) Equal d) Any of these
5) The Debit balance as per Cash book means
a) Favorable balance as per cash book
b) Unfavorable balance as per cash book
c) Negative balance as per cash book
d) Balance as per Pass book
6) When Bank has Debited Interest, It results in ________ in Bank Overdraft
a) No Change b) A Decrease
c) An Increase d) Any of these
7) Dividend collected by the Bank on behalf of the customer will ______ the Bank Overdraft
a) Increase b) Decrease
c) Make no Difference d) None of these
8) An Issue of a cheque of Rs.5500/- to an outsider, put on the Debit side of the Cash book will
a) Increase Cash book balance by Rs.5500/-
b) Decrease Cash book balance by Rs.5500/-
c) Decrease Cash book balance by Rs.11000/-
d) Increase Cash book balance by Rs.5500/-
9) The BRS is a
a) Compulsory Requirement
b) Statutory Requirement
c) Voluntary Requirement
d) All of these
10) A wrong Credit given by the banker to the customer will result in ________ Balance in the Cash Book as compared to the Pass Book
a) Lower b) Higher
c) Equal d) Any of these
11) When the Balance as per cash book & pass book is the same, it means that
a) There is definitely no Error in the TWO books
b) There is ERROR in the Cash book
c) There is NO ERROR in the Pass book
d) There may Still be some Error in the TWO books
12) Which of the following is True about BRS
a) It is a Part of Financial Statements
b) It is prepared by the Bank
c) It is prepared by the Account Holder ( Business )
d) It is Never required at all.
13) A BRS helps to locate the difference between
a) Cash book’s Cash balance & Bank Balance
b) Cash book’s Bank balance & Pass Book Balance
c) Pass Book Balance & Bank Statement
d) All of these
14) If a cheque Issued to a supplier is not Presented for payment to the bank but wrongly shown in the Cash Column of the Cash book, the
a) Pass book balance will be higher than the Cash book balance
b) Cash book balance will be higher than the Pass book balance
c) There would be no difference in the two books
d) None of the above
15) If the Interest Credited in the Pass Book by a Bank on 31/03/__ is Debited in the Cash Book on 01/04/__, then
a) Pass book balance would be higher than the Cash Book balance
b) Cash book balance would be higher than the Pass Book balance
c) There would be no Difference in the TWO books
d) None of these
16) If the Cheque received by the customer has not been paid to the bank but duly entered in the Cash book, then
a) Pass book balance would be higher than the Cash book Balance
b) Cash book balance would be higher than the Pass book Balance
c) No difference
d) none of these
17) The Balance Due to the Customer from Bank means
a) Positive balance b) Overdraft
c) Any of these d) none of these
18) The entries recorded in the cash book are made by
a) Bank b) Business
c) Government d) Suppliers
19) Which of the Following errors should be corrected in the Adjusted Cash Book
a) Entry Posted twice in the Cash book
b) Cheques Deposited but not Credited by the Bank
c) Cheques issued but not presented for Payment
d) Wrong Credit given by the bank
20) Bank Charges adjusted Twice in the Cash Book make Overdraft as per Cash book
a) Increase b) Decrease
c) Equal d) Any of these
21) Overdraft as per Cash book on 31/03/09 was Rs.20000/-, it was found that Bank
Charges of Rs.500/- recorded in the Pass book were not adjusted in the Cash book,
While other charges of Rs.800/- were recorded twice in the Cash book, In addition a
Cheque of Rs.1000/- discounted with Bank for Rs.980/- was recorded without
adjusting the discount, the Pass book Overdraft balance would be
a) 20320 b) 20280
c) 18720 d) 19720
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Differance between Pass book and bank is called Bank reconcilation.
Points to remember for Bank reconcilation:
NEED FOR BANK RECONCILIATION:
1. Cheques issued but not yet presented for payment.
2. Cheques paid into the bank but not yet collected.
3. Direct debit made by the bank on behalf of the customer.
4. Amount directly deposited in the bank account.
5. Interest and dividends collected by the bank.
6. Direct payments made by the bank on behalf of customers.
7. Cheques deposited/ bills discounted dishonored.
8. Errors committed in recording transactions by the organization.
9. Errors committed in recording transaction by the bank.
PERFORMA OF BANK RECONCILIATION STATEMENT
To prepare a bank reconciliation statement, the bank balance as per the cash book and the bank statement as on a particular day are required along with details of both the books. If the two balances differ, the entries in both the books are compared and the items on accounts has which the difference has arisen are ascertained with the respective amount involved so that the bank reconciliation statement can be prepared.
The following Table explains this.
Particulars Amount Rs.
Balance as per cash book -----------
Add: Cheques issued but not presented -----------
Interest credited by the bank -----------
-----------
Less: Cheques deposited but not credited by bank -----------
Bank charges not recorded in the cash book -----------
Balance as per the pass book XXXXXX
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