This GSEB Class 11 Commerce Accounts Notes Part 1 Chapter 11 Bank Reconciliation Statement covers all the important topics and concepts as mentioned in the chapter.

Bank Reconciliation Statement Class 11 GSEB Notes

In the current scenario bank services are very important and necessary for any trade or business. Generally, a trader or businessman opens a current account in the bank. As well as to record the transactions with bank, a trader opens a ‘bank account’ in the books of accounts or keep a ‘bank column’ in two or three columnar cashbook. Similarly bank also records the transactions with customers in a book known as Current account. Bank gives the copy of Current account to its customer which is known as Bank statement or Bank passbook. In this passbook or statement different transactions that have been effected by a trader with the bank are recorded.

Generally, on a particular date, the balance as per the bank column of cashbook should be equal to the balance as per passbook. But these balances are opposite, that means, if debit balance in the cashbook, than this, credit balance in the passbook. In the same way, if credit balance in the cashbook, than this, debit balance in the passbook, because of there is a debtor creditor relationship between bank and trader.

But in most of the cases balance as per cashbook and balance as per passbook are not equal, then it is necessary to find out the reasons of difference and to reconcile the difference on the basis of these two books i.e., cashbook and passbook. Such type of work is done by preparing a bank reconciliation statement. This statement is also known as Bank reconciliation.

→ There is a debtor-creditor relationship between bank and the trader or businessman.

→ Bank reconciliation statement is not an account but it is only a statement.

→ Passbook means a copy of a trader’s account in the books of bank.

→ Cashbook means a copy of a bank’s account in the books of trader.

→ Cashbook is prepared by the trader while passbook is prepared by the bank.

→ Debit balance as per cashbook means bank balance.

→ Credit balance as per cashbook means bank overdraft.

→ Debit balance as per passbook means bank overdraft.

→ Credit balance as per passbook means bank balance.

→ Bank balance is receivable for the business while it is payable for a bank.

→ Bank overdraft is payable for the business while it is receivable for a bank.

→ Bank reconciliation statement means a statement showing the causes of difference in the balance of a bank as per cashbook and a balance as per passbook, for a particular time or on a particular date.

→ Bank reconciliation statement is prepared by a trader.

→ Because of the preparation of bank reconciliation statement, if any accounting errors are committed either by a trader or a bank also comes to the notice. But it does not rectify these errors; it shows the difference arising because of such errors.

→ Bank reconciliation statement can be prepared at any time.

→ Bank reconciliation statement is prepared on the basis of cashbook and passbook.

→ A transaction because of which a difference does not arise between the bank balance as per cashbook and balance as per passbook, is not recorded in the bank reconciliation statement.

→ If cashbook and passbook are given for a particular period, then uncommon transactions are taken into account while preparing a bank reconciliation statement.

→ There are two main methods of preparation of bank reconciliation statement:

1. Mathematical method or Add-Less method.
2. Accounting method or Debit-Credit Column method.

→ If the opening and the closing balance of a particular time period are given, then in such circumstances, take the closing balance only for preparing a bank reconciliation statement.