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    Accountancy Unit 4 Questions:-: 5 Marks Question

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    Hari Haran
    This document provides information about preparing a bank reconciliation statement (BRS), including definitions, the purpose of a BRS, key elements, and how to rectify errors. A BRS reconciles the differences between a bank statement balance and cash book balance. It defines a BRS, explains that a BRS identifies discrepancies between a passbook and cash book, and lists the key features of a BRS. The document also describes how to rectify errors that result in the cash book showing more or less than the bank statement, and provides the basic format of a BRS.

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    Accountancy Unit 4 Questions:-: 5 Marks Question

    Uploaded by

    Hari Haran
    89 views11 pages
    This document provides information about preparing a bank reconciliation statement (BRS), including definitions, the purpose of a BRS, key elements, and how to rectify errors. A BRS reconciles the differences between a bank statement balance and cash book balance. It defines a BRS, explains that a BRS identifies discrepancies between a passbook and cash book, and lists the key features of a BRS. The document also describes how to rectify errors that result in the cash book showing more or less than the bank statement, and provides the basic format of a BRS.

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    This is B.Com., Cs Unit 4 Question and Answer

    Original Title

    Accountancy Unit 4

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    This document provides information about preparing a bank reconciliation statement (BRS), including definitions, the purpose of a BRS, key elements, and how to rectify errors. A BRS reconciles the differences between a bank statement balance and cash book balance. It defines a BRS, explains that a BRS identifies discrepancies between a passbook and cash book, and lists the key features of a BRS. The document also describes how to rectify errors that result in the cash book showing more or less than the bank statement, and provides the basic format of a BRS.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    89 views11 pages

    Accountancy Unit 4 Questions:-: 5 Marks Question

    Uploaded by

    Hari Haran
    This document provides information about preparing a bank reconciliation statement (BRS), including definitions, the purpose of a BRS, key elements, and how to rectify errors. A BRS reconciles the differences between a bank statement balance and cash book balance. It defines a BRS, explains that a BRS identifies discrepancies between a passbook and cash book, and lists the key features of a BRS. The document also describes how to rectify errors that result in the cash book showing more or less than the bank statement, and provides the basic format of a BRS.

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    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

    https://www.toppr.com/guides/principles-and-practices-of-
    accounting/bank-reconciliation-statement/intro-and-
    importance/
    https://www.toppr.com/guides/accountancy/bank-
    reconciliation-statement/preparation-of-bank-reconciliation-
    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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