BANK

RECONCILIATION STATEMENT

It is a statement which compares the cash book balance with the bank statement balance. It’s a
verification procedure is mostly executed whenever there is a difference taking place between cash
book and bank statement balance.

Reasons of such differences are:

A. UNCREDITED LODGEMENT or BANK LODGEMENT:
This is the amount recorded in the bank column of cash book, but not yet been recorded in the
bank statement.
(Debited in cash book but not credited in bank statement)

B. UNPRESENTED CHEQUES:
This means cheque issued for payment but not yet debited in the bank statement as cheque is
not presented by payee.
(Credited in cash book but not debited in bank statement)
C. CREDIT TRANSFER:
It is a direct transaction between customer and the bank for which no entry is being made in the
debit side of the cash book while the bank statement is automatically credited.

D. DIRECT DEBIT:
Here, the amount is debited directly from the bank statement to pay different amounts without
making any entries in credit side of the cash book.

E. STANDING ORDER:
Here, the amount is debited directly from the bank statement to pay fixed amounts without
making any entries in Credit side of the cash book.

F. BANK CHARGES:
This amount is debited in bank statement without making any entries in the credit side of the
cash book.

G. DISHONOURED CHEQUE:
This is the amount which is not accepted and returned by the bank due to insufficient funds in any
account.









 FORMATS:
UPDATED CASH BOOK
DATE DETAILS £ DATE DETAILS £
Same Balance b/d X Direct debit X
Date (brought down from cash book)
Bank giro/credit transfer X Standing order X
Bank charges X
Dishonoured cheques X
Last Balance c/d X
date
X X
Balance b/d X
(new balance must equal to
balance as per bank statement)



BANK RECONCILIATION STATEMENT

DETAILS £
Balance as per bank statement X
Add Uncredited lodgments / Bank lodgments X
Less Unpresented cheque (X)

Balance as per cash book X

Alternatively:

DETAILS $

Balance as per updated cashbook X

ADD: Unpresented Cheques X

LESS: Bank Lodgements/ Uncredited Lodgements (X)

Balance as per Bank Statement X

**While finding the amount of balance as per bank statement you need to put all the amounts in the
given format and then back calculate.
CLASSIFICATION OF ITEMS (UPDATED CASH BOOK):
Credit transfer /Bank giro (debit side)
Direct debit /Standing order (credit side)
Bank charges (credit side)
Dishonoured cheques (credit side)

CLASSIFICATION OF ITEMS (BANK RECONCILIATION STATEMENT):
Unpresented cheques (debit)
Uncredited lodgements (credit)

THE NATURE OF BALANCES OF CASH BOOK AND BANK STATEMENT

NATURE OF BALANCE CASH BANK
BOOK STATEMENT
In case of Surplus cash Debit balance Credit balance
ln case of Overdraft Credit balance Debit balance