Similarity And Difference Between Bank Reconciliation And Bank Statement Pdf

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Overview and Key Difference 2.

These records may disagree due to various reasons and show different balances.

How to Audit a Bank Reconciliation

If there is any discrepancy between the cash book balance and that of bank statement, then the business prepares a bank reconciliation statement BRS to explain the causes of differences and to reconcile the two balances. The idea of BRS is to discover the various things that the bank has done in the bank statement which business was not aware of, put right anything that is wrong and draw up a logical explanation of the remaining differences, which are not errors but are delayed by the time lag. A bank statement provides an independent record of exactly those transactions which are entered in the bank column of a cash book. Theoretically, closing balance in the cash book should be the same as the balance in the bank statement on the same date. The independent record of bank statement therefore offers an excellent check on the accuracy and entirety of the cash book.

This chapter contains these topics:. Use processing options to set the default credit and debit transaction types, bank account, and transit account. Clear, create, and post any receipts or drafts collected. Clear, write, and post any payments or drafts paid. You can enter information from your bank statements to track all banking activity, such as electronic fund transfers. When you enter bank statements for multi-currency, you can enter transactions for up to three different currencies. The system calculates the gain or loss.

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Internal audits are important in any company, to check whether a given procedure, system, project or product is sound. The same applies to bank reconciliations. But how do you audit a company's bank reconciliation? In order to begin, we need a copy of the bank reconciliation of the month we wish to audit, a copy of the corresponding accounting records, and a copy of the bank statement for the month in question. The fundamental first step is to begin with a triple check, comparing the balance on the three documents and confirming that it is correct.

After you refresh the reconciliation table, you can reconcile your bank statements. Final mode creates accounting batches, generates reconciliation reports, and updates the Account Ledger table F Refresh the reconciliation table. See Section This report shows summary information about each batch.

Updated on Jan 05, - PM. Businesses maintain cash book to record both the cash as well as bank transactions. A Cashbook has a cash column which shows cash available with the business and a bank column which shows cash at bank. Bank also keeps an account for every customer in their books. An account statement is sent regularly to the customers by the bank.


Cash book balance includes transactions that are not included in the bank balance. Bank statement balance includes transactions that are not included in the cash balance. Deposits in transit and outstanding checks are examples of transactions entered in the cash balance, but not in the bank balance.


Difference Between Cash Book Balance and Bank Statement Balance

Note that debits and credits are reversed in bank statementsbecause the bank will be recording the transaction from its point ofview, in accordance with the business entity concept. Reasons to prepare a bank reconciliation statement. The cash book records all transactions with the bank. The contents of the cash book should be exactly the same as therecord provided by the bank in the form of a bank statement, andtherefore our records should correspond with the bank statement.

People make errors. Banks make errors. That's why we compare our checkbooks with our bank statements, just in case someone added a figure wrong. It's even more important for your business than your personal account because business deposits and withdrawals happen a lot more frequently. It's also important to audit the reconciliation and confirm that everything is accurate.

Chapter 12: Bank reconciliations

The balance on the cash account which should be the same as the balance in the cash book is compared to the balance on the bank statements at a given date. However, these two balances may not agree. There are various reasons. Time lag between writing a cheque and the payment appearing on the bank statement unpresented cheques. Time lag between depositing amounts into the bank account and these appearing on the bank statement unrecorded lodgements. In the bank statement, A debit balance indicates a bank overdraft we owe money to the bank — an asset for the bank. The main reasons for differences between the cash book and the bank statement The balance on the cash account which should be the same as the balance in the cash book is compared to the balance on the bank statements at a given date.

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