Preparing a Bank Reconciliation Statement, step by step
- Decide whether each item is added or deducted using one simple question
- Prepare a BRS starting from the favourable balance as per cash book
- Prepare a BRS starting from the favourable balance as per passbook by reversing the treatment
- Handle errors by the firm or the bank inside a BRS
In the last lesson you became a detective and found the clues: cheques not presented, cheques not collected, bank charges, direct deposits, errors. Today we write the report. A Bank Reconciliation Statement is just a neat list that starts with one balance, adds some items, deducts some items and lands exactly on the other balance. The secret is not memorising fifty rules. It is one question that you ask for every item. Master that question and every BRS in the board exam becomes a 5-minute job.
1. What you need before you start
- The date on which the BRS is prepared (it is always prepared as on a particular date, usually the month end).
- The starting balance: either the balance as per cash book (bank column) or the balance as per passbook.
- The list of differences, found by comparing the two records (the tick method of Lesson 1).
NCERT describes two ways of reconciling: (a) preparing the BRS without adjusting the cash book, and (b) preparing it after adjusting the cash book. This lesson covers the first way; the next lesson covers the second.
2. The one question that decides + or −
When you start from the cash book balance and want to reach the passbook balance, ask for every item:
“Because of this item, is the passbook balance higher or lower than the cash book balance?”
Higher → Add. Lower → Deduct (Less).
That is all. Using Lesson 1, the standard items fall into place:
| Item | Passbook is… | Starting from cash book | Starting from passbook |
|---|---|---|---|
| Cheques issued but not yet presented for payment | Higher | Add | Less |
| Cheques deposited but not yet collected / credited | Lower | Less | Add |
| Cheques recorded in cash book but not sent to bank | Lower | Less | Add |
| Bank charges, interest on overdraft debited by bank | Lower | Less | Add |
| Payments by bank on standing instructions (insurance, EMI, bills) | Lower | Less | Add |
| Cheque / bill dishonoured, debited only by bank | Lower | Less | Add |
| Interest or dividend collected / credited by bank | Higher | Add | Less |
| Amount deposited directly by a customer (UPI, NEFT, cash) | Higher | Add | Less |
“Start from the book, travel to the other book.” If the destination is bigger, add; if smaller, deduct. When you start from the passbook, the destination is the cash book, so every sign simply flips.
Do not decide by the words “debit” or “credit” in the question. “Bank debited ₹200 for charges” and “bank credited ₹200 interest” are both about the passbook. Always convert the words into “passbook higher or lower?” first.
3. The format
NCERT shows two layouts. Both are correct.
3.1 Single amount column (Add / Less)
| Particulars | ₹ |
|---|---|
| Balance as per cash book | …… |
| Add: Cheques issued but not presented | …… |
| Interest credited by the bank | …… |
| Less: Cheques deposited but not credited | …… |
| Bank charges not recorded in cash book | …… |
| Balance as per passbook | …… |
3.2 Two amount columns (+ and −): the one we will use
Each item goes into the (+) or the (−) column. The starting balance also goes into a column (a favourable balance in +). The final balance is the figure that makes both column totals equal, so it goes into the column with the smaller total. The two equal totals are your built-in check.
Steps (NCERT): (i) Write the heading with the name of the firm and the date. (ii) Start with the balance as per cash book (or as per passbook). (iii) Deduct cheques deposited but not yet collected. (iv) Add cheques issued but not yet presented and amounts deposited directly. (v) Deduct bank charges, interest on overdraft, standing-instruction payments and dishonoured cheques/bills. (vi) Add interest, dividends and other credits given by the bank. (vii) Adjust errors by their effect. (viii) The net result must equal the other balance. From the passbook, reverse every treatment.
4. Starting from the favourable balance as per cash book
- Starting point: cash book ₹20,000 favourable → (+) column.
- Cheque issued, not presented: passbook higher → Add 6,000. NEFT direct deposit: passbook higher → Add 5,000. Interest: passbook higher → Add 400.
- Cheque deposited, not collected: passbook lower → Less 8,000. Service charges: passbook lower → Less 250.
- (+) total = 20,000 + 6,000 + 5,000 + 400 = 31,400. (−) items = 8,250. Difference 31,400 − 8,250 = 23,150 goes in the (−) column as the balance as per passbook, so both totals become 31,400.
Bank Reconciliation Statement of Sharma Traders as on 30 April 2026
| Particulars | (+) ₹ | (−) ₹ |
|---|---|---|
| Balance as per cash book | 20,000 | |
| Cheque issued but not yet presented for payment | 6,000 | |
| Amount deposited directly by Rao Brothers (NEFT) | 5,000 | |
| Interest credited by the bank | 400 | |
| Cheque deposited but not yet collected | 8,000 | |
| Service charges debited by the bank | 250 | |
| Balance as per passbook | 23,150 | |
| 31,400 | 31,400 |
Why does the passbook balance sit in the (−) column? Think of it as: 20,000 + 11,400 − 8,250 = 23,150. To make the two columns equal, the answer is placed on the lighter side. When the answer lands in the (−) column it is a favourable balance; in the next lesson you will see that if it lands in the (+) column, it is an overdraft.
Prepare a BRS of Mehta Electricals as on 31 May 2026 and find the balance as per passbook (in ₹): balance as per cash book ₹18,500; cheques issued but not presented ₹4,200; cheques deposited but not credited ₹3,100; bank charges ₹150 not in cash book; interest credited by bank ₹320 not in cash book.
5. Starting from the favourable balance as per passbook
Sometimes the question gives the passbook balance and asks for the cash book balance. Now you travel from the passbook to the cash book, so the question becomes: “Because of this item, is the cash book higher or lower than the passbook?” Every sign flips.
(i) Cheques issued but not presented ₹14,300.
(ii) Cheques deposited but not yet credited ₹9,750.
(iii) Bank charges ₹180, not in cash book.
(iv) Dividend ₹2,400 collected by the bank, not in cash book.
(v) Insurance premium ₹3,600 paid by the bank on standing instructions, not in cash book.
(vi) A customer paid ₹5,200 directly by UPI, not in cash book.
- Start: passbook ₹48,600 favourable → (+) column.
- (i) The cash book has already deducted the cheques; the passbook has not. Cash book is lower → Less 14,300.
- (ii) The cash book has already added the deposits; the passbook has not. Cash book is higher → Add 9,750.
- (iii) and (v) The passbook has deducted them; the cash book has not. Cash book higher → Add 180 and 3,600.
- (iv) and (vi) The passbook has added them; the cash book has not. Cash book lower → Less 2,400 and 5,200.
- (+) = 48,600 + 9,750 + 180 + 3,600 = 62,130. (−) = 14,300 + 2,400 + 5,200 = 21,900. Cash book balance = 62,130 − 21,900 = 40,230.
Bank Reconciliation Statement of Verma Mobile Store as on 31 May 2026
| Particulars | (+) ₹ | (−) ₹ |
|---|---|---|
| Balance as per passbook | 48,600 | |
| Cheques deposited but not yet credited | 9,750 | |
| Bank charges not entered in cash book | 180 | |
| Insurance premium paid by the bank | 3,600 | |
| Cheques issued but not presented for payment | 14,300 | |
| Dividend collected by the bank | 2,400 | |
| Amount deposited directly by a customer (UPI) | 5,200 | |
| Balance as per cash book | 40,230 | |
| 62,130 | 62,130 |
On 30 June 2026, the passbook of Sonu Sports shows a credit balance of ₹32,000. Cheques issued but not presented ₹7,500; cheques deposited but not yet cleared ₹4,800; bank charges ₹200 not recorded in the cash book. What is the balance as per cash book (in ₹)?
6. Errors inside a BRS
For errors, use the same question, but think about what the correct figure should have been.
- An error that has made the cash book too small (payment overstated, receipt understated, receipts side undercast, payments side overcast, deposit put in cash column) → the passbook is higher → Add (from cash book).
- An error that has made the cash book too big (receipt recorded twice, payment understated, receipts side overcast, payments side undercast) → Less.
- A bank error that wrongly debited our account → passbook lower → Less. A bank error that wrongly credited our account → passbook higher → Add.
(a) A cheque of ₹4,500 issued to a supplier was recorded as ₹5,400 in the cash book.
(b) The receipts side of the bank column was undercast by ₹200.
(c) A cheque of ₹1,200 deposited into the bank was recorded in the cash column.
(d) The bank wrongly debited ₹300 to the store’s account (it belonged to another customer).
(e) A cheque of ₹2,000 deposited was recorded twice in the cash book.
(f) Cheques of ₹3,000 issued were not presented for payment.
- (a) Payment overstated by ₹900 → cash book too small → passbook higher → Add 900.
- (b) Receipts undercast → cash book total too small → Add 200.
- (c) Bank column never got the deposit, but the bank did → passbook higher → Add 1,200.
- (d) Bank error, wrong debit → passbook lower → Less 300.
- (e) Receipt recorded twice → cash book too big → Less 2,000.
- (f) Issued not presented → Add 3,000.
- (+) = 25,000 + 900 + 200 + 1,200 + 3,000 = 30,300. (−) = 300 + 2,000 = 2,300. Balance as per passbook = 28,000.
Bank Reconciliation Statement of Gupta Kirana Store as on 30 June 2026
| Particulars | (+) ₹ | (−) ₹ |
|---|---|---|
| Balance as per cash book | 25,000 | |
| Cheque of ₹4,500 recorded as ₹5,400 (excess payment) | 900 | |
| Receipts side of bank column undercast | 200 | |
| Cheque deposited recorded in cash column | 1,200 | |
| Cheques issued but not presented for payment | 3,000 | |
| Wrongly debited by the bank | 300 | |
| Cheque deposited recorded twice in cash book | 2,000 | |
| Balance as per passbook | 28,000 | |
| 30,300 | 30,300 |
Partly presented cheques: “Cheques of ₹19,000 were issued, of which ₹13,200 were presented before the month end.” Only the unpresented part (₹5,800) causes a difference. The same applies to deposits: “₹22,000 deposited, of which ₹16,500 credited” → only ₹5,500 is a reconciling item.
Starting from the balance as per cash book, should “dividend collected by the bank and credited in the passbook only” be added or deducted? (Answer add or less.)
- deducted
- added
- ignored, because the bank has not recorded them
- added only if they are outstation cheques
- deducted, because payments reduce the balance
- ignored, because it is a cash book error
- deducted, because the passbook is lower
- added, because the cash book balance is too small
7. Exam tips
- Write the full heading: “Bank Reconciliation Statement of … as on …”. The words as on matter, because a BRS belongs to one date.
- Describe each item in words (not just “cheques”), and write the final line clearly: “Balance as per passbook” or “Balance as per cash book”, with favourable/overdraft if needed.
- With two columns, the two totals must be equal. If they are not, recheck your signs.
- A 4-mark BRS usually carries ½ mark per correct item plus marks for the heading and final balance. Neatness counts.
📌 Points to remember (Quick Revision)
- A BRS is prepared as on a date, starting from the balance as per cash book or as per passbook.
- Key question from the cash book: is the passbook higher (add) or lower (less) because of this item?
- From cash book: add cheques issued not presented, direct deposits, interest/dividend collected; less cheques deposited not collected, bank charges, standing-instruction payments, dishonoured cheques.
- Starting from the passbook, every treatment is reversed.
- Errors: judge whether the error made the cash book (or passbook) too big or too small; only the unpresented or uncollected part of cheques is a reconciling item.
- In the two-column format both totals must be equal; the final balance goes in the column with the smaller total.
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