Topic: Bank Reconciliation Statement

Bank Reconciliation: is a statement of account which is prepared to bring cash book and bank
statement balances the same.
Steps in preparation of Bank Reconciliation Statement
Step # 01
Compare bank statement with cash book to find out the missing figures from cash book, and
prepare adjusted cash book or updated cash book to adjust the items which are in the bank
statement but not in the cash book.
(The final balance of adjusted cash book is transferred to the balance sheet as bank balance
under current assets).
Step # 02
Compare cash book with bank statement to find out missing figures in bank state and prepare
bank reconciliation in which cheques issued but not presented (called unpresented cheques), and
cheques deposited but not credited (called uncredited cheques) or any other banking errors are
adjusted.
Other important Terms
Direct Debit: the direct payment system under which bank is instructed to pay to the creditors
on demand.
Credit Transfer: It is the direct deposit system under which a debtor pays the due amounts in
business bank account electronically.
Standing Order: The regular series of payments by a business, which are instructed to the bank
in advance and the bank acts accordingly on regular basis.
Bank Giro System: It also acts like a credit transfer in which a debtor pays in the business bank
account electronically.
Unpresented Cheques: Cheques issued by the business but it is not presented by the bearer of
the cheque.
Uncredited Cheques: Cheques received from the debtors or customers, and sent to the bank, but
not credited in the business bank account.
May 2003 P2 Q1
November 2004 P2 Q1
May 2006 P2 Q1
Specimen 2010 P2 Q2