1. Ch-3 Bank Reconciliation Statement
 Pass Book: -
 Bank pass book (Bank Statement) is copy of customer’s A/c in the books of bank.
 Bank usually supplies this statement periodically or on demand.
 Now a day’s bank provides NET Banking & Mobile Banking.
 Format of Pass book.
Date Particular Debit Credit Dr or Cr. Balance Initials
Withdrawals Deposits
 Methods of Recording Bank Transactions
Journal Entries
1. Recording deposits
Bank A/c Dr
To Customer’s A/c
2. Recording Withdrawals
Customer A/c Dr
To Bank A/c
Note: - Debit Side of Cash Bank = Credit side of Pass Book
Credit Side of Pass Book = Debit side of Cash Book
Debit Balance of Cash Book = Credit Balance of Pass Book
Credit Balance of cash Book (Overdraft) = Debit Bank Balance of Pass Book
(Overdraft)
 Timings of Recording Banking Transactions
Timing of recording Banking transaction in cash book and pass book need not necessary be
same. This may differ due to various reasons:
The reasons for above are summarised as follows:-
Transactions Timings of Recording Timing of Recording in
In Cash Book Pass Book
1. Cash Deposits When Cash is deposited When Cash is deposited
2. Cash withdrawn When Cash is withdrawn When Cash is withdrawn
3. Cheque issued When Cheque is issued When Cheque is presented
for payment
4 Cheque deposited When Cheque is deposited When Cheque is collected
5 Bank Charges When information for Bank When charges are levied
is received
6 Interest charged by Bank When information from When interest is charged
Bank is received by the Bank
7 Interest allowed by Bank When information from When interest is allowed by
Bank is received Bank
8 Direct payment on Behalf When information from When payment is made by
Bank is received of customers he the Bank
9 Direct Collection on behalf When information from When amount is collected
of customer Bank is received by the Bank
10 Dishonour of Cheque/ Bills When information from When cheque/B/R/ is
receivable Bank is received dishonoured
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2.  Bank Reconciliation Statement
1. Need : -
In case of disagreement in the balance of the Cash Book and the Pass Book, the need to
prepare Bank Reconciliation Statement arises.
2. Meaning :-
Bank reconciliation statement reconciles bank Balance as per Cash Book with Balance as
per Pass Book by showing all causes of different between the two.
3. Purpose:-
After coming to know the causes & to take necessary follow – up action.
Distinction between Bank statement and Bank Reconciliation Statement
Basis of Distinction Bank Statement/ Pass Book Bank Reconciliation Statement
1 Who prepares It is prepared by the Bank It is prepared by the bank
customeri.e. account holder
2 Object It is prepare to inform the It is prepared to reconcile the
customer bout all transactions bank balance as per cash book
which have taken place during with the bank balance shown by
the period covered by the the bank statement.
statement
3 Timing when It is prepared for a particular It is prepared at a particular
prepared period date.
4 Necessity It is compulsory for the bank to It is not compulsory.
prepare it.
5 Contents It shows – It shows –
(a) Date of Transactions (a) Causes of disagreement &
(b) Particulars of Transactions (b) Amount thereof
(c) Withdrawals
(d) Deposits
(e) Balances
6 Starting Amount It starts with the balance as per It may start with bank balance as
customer’s account in bank per Cash Book or Bank
ledger Statement.
7 Final Result It shows the balance in It may show the bank balance as
customer’s account as per bank per cash book or Bank Statement
ledger at the end of the period at the end of period
 Causes for disagreement between Pass Book & Cash Book
1. Timing different of recording banking transaction
2. Errors in Cash Book committed by the account holder
3. Errors in Pass Book committed by the Bank
Particulars Plus Items Minus Items
Rs. Rs.
A Bank balance as per Cash Book XXX
B Add:Transaction having the effect of higher balance in
Pass Book: XXX
(a) Cheque deposited into the bank but not recorded
in cash book XXX
(b) Cheques issued but not yet presented for payment
(c) Interest allowed in Pass Book only XXX
(d) Bill Receivable directly collected by bank XXX
(e) Direct payment by a customer into bank but not
recorded in cash book XXX
(f) ‘Cheques issued return on technical grounds XXX
(g) A wrong credit given by bank in Pass Book. XXX
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3. C Less:Transactions having the effect of lower balance in
Pass Book.
(a) Cheques received and recorded in Bank Column
but not yet sent to bank for collection XXX
(b) Cheques deposited but not yet collected by bank
(c) Bank charges interest on overdraft debited in Pass XXX
Book only XXX
(d) Insurance Premium paid directly by bank
understanding advice XXX
(e) Cheques deposited for collection, returned
dishonoured and record in Pass Book only XXX
(f) Discounted bill dishonoured but not recorded in
Cash Book XXX
(g) A wrong debit given by bank in Pass Book XXX
XXX
D Balance as per Pass Book XXX
Particulars Plus Minus
Items Items
Rs. Rs.
A Bank balance as per Pass Book XXX
B LESS: Transaction having the effect of lower
balance in Cash book:
(a) Cheque deposited into the bank but not recorded
in cash book XXX
(b) Cheques issued but not yet presented for payment XXX
(c) Interest allowed in Pass Book only XXX
(d) Bill Receivable directly collected by bank XXX
(e) Direct payment by a customer into bank but not
recorded in cash book XXX
(f) ‘Cheques issued return on technical grounds XXX
(g) A wrong credit given by bank in Pass Book. XXX
C ADD: Transactions having the effect of higher
balance Cash Book.
(a) Cheques received and recorded in Bank Column
but not yet sent to bank for collection XXX
(b) Cheques deposited but not yet collected by bank XXX
(c) Bank charges interest on overdraft debited in Pass
Book only XXX
(d) Insurance Premium paid directly by bank
understanding advice XXX
(e) Cheques deposited for collection, returned
dishonoured and record in Pass Book only XXX
(f) Discounted bill dishonoured but not recorded in
Cash Book XXX
(g) A wrong debit given by bank in Pass Book XXX
XXX
D Balance as per Cash Book XXX
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