Accountancy Unit 4 Questions:-: 5 Marks Question

ACCOUNTANCY UNIT 4 QUESTIONS:-
5 Marks Question
1. Define BRS
2. What is BRS?
3. Elements of BRS
10 Mark Question
4. How to rectify the errors through BRS

5. Format of BRS
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statement/
Accountancy [ Unit 4 ]
Definition of Bank Reconciliation

Statement
Following are the main definitions of Bank Reconciliation
Statement :
According to R.G. Willicyns, "The statement which is

prepared to reconcile the balance as expressed by the Bail for
the customer and the balance as per Cash Books, called Bank
Reconciliation Statement."
According to carter, "It is a statement which is prepared to

reconcile the BankBalance shown by Cashbook and the balance
shown by Bank Statement."
According to Batlihpi, "A Reconciliation Statement is,

therefore, prepared at periodical intervals with a view to
indicate the items which cause such agreement between the
balance as per the Bank Columns of the Cash Book and the
Bank Pass Book on any such date."
The Meaning of a Bank Reconciliation

Statement (BRS)
Every entity has to prepare a bank reconciliation statement.
This statement indicates the differences between the passbook
and the cash book of the entity. By reconciling the differences
that exist between the two, a Bank Reconciliation Statement
helps in arriving at the exact value of the amount of bank
balance held on a particular date.
It is quite important to prepare such a statement for

reconciliation for any reason that might lead to a difference in
the value of passbook and cash book balance.
Features of BRS
Features of a Bank Reconciliation Statement
The features of a Bank Reconciliation statement are:
1. BRS, as the name suggests is a statement.

2. It is not an account and thus, does not form a part of the
process of Accounts.
3. A firm or an individual prepares it to reconcile the causes
of difference between the Bank balance as per Cash Book and
the Bank balance as per Pass Book.
4. A firm may prepare it at any time during the financial year,
as and when required.
5. It is prepared on a particular date.
Rectification of errors preparation of
bank reconciliation Statement:-
Errors and omissions:
Some differences in Cash Book and Bank Statement may be the result of
errors committed by the bank or by the person responsible for writing up
Cash Book. These errors have to be properly rectified. Followings are the
few examples of such errors and omissions.
1. Errors resulting more bank balance in Cash Book:
A few examples of such errors and omissions are given below that result
into more bank balance in Cash Book.
(a) Cheque/Check omitted to be sent to the bank for collection:
Sometimes we receive cheque from debtors, record it in the Cash Book

(on debit side in bank column), but forget to send this cheque to bank for
collection. Due to this omission Cash Book shows more bank balance
while Bank Statement shows less bank Balance.
(b) Issued cheque omitted to be recorded in Cash Book or

wrongly recorded in Cash Column:
Cheques are issued daily to make payments to creditors. Sometimes a

cheque issued to creditors is omitted to be recorded in Cash Book (on
credit side in bank column) or wrongly recorded in Cash column of the
Cash Book. This errors or omission result into showing more bank
balance in Bank Statement.
(c) Wrong casting of bank column or cash book:
Sometimes errors may be committed to casting (totaling) the bank

column of Cash Book. If the debit side of the Cash Book (Bank Column)
is overcast, or if the credit side of the Cash Book (Bank Column) is
undercast then Cash Book will show more bank balance as compared to
Bank Statement.
(d) Deposited cheque omitted to be recorded or wrongly

recorded on the debit column of the bank statement by the
bank:
Sometimes an error or omission is committed by the bank staff. Suppose

on receiving a cheque from debtors, we deposit it into the bank after
recording it in the Cash Book. But bank omitted to record it in the Bank
Statement or it is wrongly recorded on the debit column of the Bank
Statement. Due to this error or omission, the Cash Book will show more
bank balance and Bank Statement will show less Bank Balance.
(e) Bank account is wrongly debited by the bank:
if the bank has wrongly debited the account in Bank Statement then
Cash Book will show more bank balance than that of shown by Bank
Statement.
Treatment of errors and omissions resulting more bank balance in Cash

Book while preparing the Bank Reconciliation Statement
Whenever by any error or omission Cash Book shows more bank balance
as compared to Bank Statement balance, the amount of errors and
omissions will be credited to bring down the balance at the level of Bank
statement, while preparing the Bank Reconciliation Statement.
2. Errors resulting less bank balance in Cash Book:
Following are the few examples of such errors and omissions that result
into less bank balance in Cash Book.
(a) Deposited Cheque/Check omitted to be recorded in Cash

Book:
We receive cheques from our debtors daily and deposit them into the
bank. Sometimes after receiving a cheque from debtors we deposit it into
the bank but forget to record it in Cash Book (On debit side in Bank
Column). Due to this error Cash Book shows less bank balance and Bank
Statement shows more.
(b) Wrong casting of Cash Book (Bank Column):
If the debit side of the Cash Book (Bank Column) is undercast or if the
credit side of the Cash Book (Bank Column) is overcast, the Cash Book
will show less bank balance as compared to Bank Statement balance.
(c) Issued cheque not recorded by the bank:
A business concern issues cheques to its creditors daily and pays these
cheques. Sometimes we issue a cheque to our creditor and bank pays the
amount of the cheque, but forgets to records it in Bank Statement (in
withdrawals column). For such mistake, Cash Book shows less bank
balance than the Bank Statement balance.
(d) Bank Account is wrongly credited by the bank:
If the bank has wrongly credited our Bank account in Bank Statement,
then Cash Book will show less bank balance and Bank Statement will
show more bank balance.
Treatment of errors and omissions resulting less bank balance in Cash

Book while preparing Bank Reconciliation Statement.
Whenever by any error or omission Cash Book shows less bank balance
as compared to Bank Statement Balance, then the amount of errors and
omissions will be debited to bring up the balance at the level of Bank
Statement, while preparing Bank Reconciliation Statement.
On a specific date when BRS is prepared, if by any reason Cash Book

shows less bank balance than the balance of Bank Statement, then the
amount of the item is debited in BRS. On the other hand if by any reason
Cash Book shows more bank balance than the balance of Bank Statement
then the amount of that item is credited in BRS.
Format of BRS
More Content:
Steps to Prepare Bank Reconciliation

Statement
Initial Check
First of all, compare the records in the company’s bank statement and
ledger cash account. Check off records that match. Check whether all
records in ledger clear the bank account statement. Reconciliation at this
stage removes major faults.
Deposit Check
Once the initial check is complete, mark all items remained in the ledger.
Add any transit deposits accounted in ledgers that might not appear in
the bank statement. Hence, the case of transit deposits occurs due to
transactions made just before bank holidays or non-working hours.
Transit deposits are deposits that are currently in pending status and
therefore, bank statement can’t note them.
Interests earned
Add the interests earned noting accurate interest rates. It applies only to
interest-bearing accounts.
Bank errors
After all, officials working in the bank are humans like us. They might
mistakenly interchange entries for two different account statements. Or
they might record wrong entries. Add or delete bank errors accordingly.
Outstanding Checks
Deduct outstanding checks from overall balance.
Check ledger errors
A bank provides facilities for which it charges. Like transfer charges,

account maintenance charges, late payment charges, etc. Deduct bank
service charges from the ledger.
Check Reconciliation
Ledger may contain posting a payment that didn’t reach completion.

Make necessary amendments. Check it carefully before adding in the
bank statement.
Equate Final Balance
The overall balance must match to finalize reconciliation.
Journal Entries
As a part of this process, you might require to prepare some journal

entries to correct errors. These errors are those which interrupt during
bank statement and general ledger comparison.

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ACCOUNTANCY UNIT 4 QUESTIONS:-

4. How to rectify the errors through BRS

Definition of Bank Reconciliation

According to R.G. Willicyns, "The statement which is

According to carter, "It is a statement which is prepared to

According to Batlihpi, "A Reconciliation Statement is,

The Meaning of a Bank Reconciliation

It is quite important to prepare such a statement for

1. BRS, as the name suggests is a statement.

1. Errors resulting more bank balance in Cash Book:

(a) Cheque/Check omitted to be sent to the bank for collection:

Sometimes we receive cheque from debtors, record it in the Cash Book

(b) Issued cheque omitted to be recorded in Cash Book or

Cheques are issued daily to make payments to creditors. Sometimes a

Sometimes errors may be committed to casting (totaling) the bank

(d) Deposited cheque omitted to be recorded or wrongly

Sometimes an error or omission is committed by the bank staff. Suppose

(e) Bank account is wrongly debited by the bank:

Treatment of errors and omissions resulting more bank balance in Cash

2. Errors resulting less bank balance in Cash Book:

(a) Deposited Cheque/Check omitted to be recorded in Cash

(b) Wrong casting of Cash Book (Bank Column):

(c) Issued cheque not recorded by the bank:

(d) Bank Account is wrongly credited by the bank:

Treatment of errors and omissions resulting less bank balance in Cash

On a specific date when BRS is prepared, if by any reason Cash Book

Steps to Prepare Bank Reconciliation

Deduct outstanding checks from overall balance.

Check ledger errors

A bank provides facilities for which it charges. Like transfer charges,

Ledger may contain posting a payment that didn’t reach completion.

Equate Final Balance

The overall balance must match to finalize reconciliation.

As a part of this process, you might require to prepare some journal

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