BANK RECONCILIATION Class: XI- Commerce Subject: Principle of Accounting Lecture prepared by: Mrs. NasreenLalani Date : 1st October,2011
BANK RECONCILIATION Transaction Cash book Bank Reconciliation Not recorded Not recorded Transposition error Transposition error
Cash book must be corrected and adjusted. Balance of bank column in cash book must equal to the bank statement balance. If not Reconciliation is needed. Why do we preparereconciliation statement
Bank Column in Cash Book DEBITCurrent Assets i.e. Cash at Bank Bank Column in Cash Book CREDITCurrent Liability i.e. Bank over draft In the bank, we are a client. Bank is responsible for our deposit. We are liability for the bank, so our account in bank has Credit Balance ( i.e. liability of bank) if Debit Balance ( i.e. assets of bank) means we owe the bank. Nature of Accounts
rectification OF CASH BOOK Cash Book (Bank Column only) • In the business’s balance sheet adjusted balance as per cash book will be shown.
Journal entries in books of account Only cash book (bank Transactions) entries will be passed. It relates to our books of account. We are concern with our accounts. Transaction in which bank is decreasing the bank will be credited in entry and vice versa.
Reconciliation Statement • Adjusted balance / (overdraft) as per Cash Book xxx • Add: un-presented / unpaid / outstanding / accrued cheques xxx • Add: bank wrongly credited our a/c xxx • Less: deposit / cheques are not recorded (xxx) • (un cleared cheques) / bank lodgment (xxx) • Less: bank wrongly debited our a/c (xxx) • Balance / (overdraft) as per bank statement (xxx)/xxx
Business NameBank Reconciliation statementFor the month ended xx-xx-xx