BANK RECONCILIATION STATEMENT- Accounting secret)

INTRODUCTION:

Bank reconciliation statement is a statement, containing the cause of disagreement between a "BANK STATEMENT" and a "CASH BOOK" for reconciliation the balance of both. It is usually prepared every month or in the regular intervals.
The need of reconciliation is to test the accuracy of entries recorded in cash book. The statement is prepared to satisfy internal and external auditor about records and balance.


ITEM CAUSING THE DISAGREEMENT:


1 Cheque is issued to various suppliers for payment, but some of them have not been presented for payment, till the date of reconciliation.

2 Cheque of customers deposited into bank, but some of them have not been cleared, till the date of reconciliation.

3 Interest credited by bank, not shown in the cash book.

4 Interest on loan or overdraft charged by bank, but not in recorded in cash book.

5 Bank collection and other charges, not shown in cash book.

6 District deposit by customer in the bank account, but there is no intimation receive from customers, or from the bank.

7 Payment made by bank but not recorded in the cash book.

8 Errors found in bank statement.

9 Errors in cash book.


Bank reconciliation statement:

The statement, showing reconciliation of cash book and bank statement:

Dishonored Cheque:

Cheque returned unpaid by bank due to insufficient fund, incorrect signature etc.

Dividend:

Share of profit distributed by company to its members or co-owner.

External auditor:

A person responsible for examining books of accounts and statements, perform statutory requirement and not responsible to the management.

Internal auditor:

A person responsible for examining books of accounts and statements appointed by the management.

Notes Receivable:

Amount receivable from the customer or debtor against promissory note.

Uncleared cheque:

Customers cheque deposited but amount is not settled or transferred yet.

Unpaid cheque:

A cheque paid to supplier or creditor, but he is not present the cheque.


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