Bank Reconciliation Statement
Take a notebook and pen first. Solve each question yourself, then pick an option. Only your first choice counts in the score, so do not rush.
Part A: MCQ (1 mark each)
- the bank
- the account holder (the business)
- the creditors of the business
- the auditor of the bank
- the bank column of the cash book
- the cash column of the cash book
- the customer's account in the books of the bank
- the bank's profit and loss account
- a credit balance in the cash book
- a debit balance in the passbook
- a debit balance in the cash book and a credit balance in the passbook
- a credit balance in both books
- added
- deducted
- ignored
- added only if they are outstation cheques
- added
- deducted
- ignored
- shown as an overdraft
- Cheques issued but not presented for payment
- Cheques deposited but not yet collected
- Interest credited by the bank but not entered in the cash book
- An amount wrongly debited by the bank
- ₹11,300
- ₹16,300
- ₹12,700
- ₹7,700
- ₹13,000
- ₹7,000
- ₹10,000
- ₹3,000
Reason (R): The cash book records a cheque payment when the cheque is issued, but the bank deducts it only when the cheque is presented for payment.
- Both Assertion (A) and Reason (R) are true, and R is the correct explanation of A.
- Both Assertion (A) and Reason (R) are true, but R is not the correct explanation of A.
- Assertion (A) is true, but Reason (R) is false.
- Assertion (A) is false, but Reason (R) is true.
Reason (R): The amended cash book records items that the business has not recorded, or has recorded wrongly, in its cash book.
- Both Assertion (A) and Reason (R) are true, and R is the correct explanation of A.
- Both Assertion (A) and Reason (R) are true, but R is not the correct explanation of A.
- Assertion (A) is true, but Reason (R) is false.
- Assertion (A) is false, but Reason (R) is true.
Part B: Exam-style questions
What is a Bank Reconciliation Statement? State any four reasons why it is prepared.
Meaning (1 mark): A Bank Reconciliation Statement is a statement prepared by the account holder on a particular date to reconcile the bank balance shown by the cash book with the balance shown by the passbook (bank statement), by listing the items that cause the difference between the two.
Need (½ mark each, any four):
- It explains the difference between the two balances and shows the true bank position.
- It brings to light errors made by the business in the cash book or by the bank in the passbook, so that they can be corrected.
- It shows items not yet recorded by the business, such as bank charges, interest, direct deposits and dishonoured cheques.
- It helps to follow up cheques not presented or not collected for a long time.
- It acts as a check on fraud, because the business's record is compared with an independent record kept by the bank.
Explain any three causes of difference between the bank balance as per cash book and as per passbook arising from a time gap. State the effect of each on the passbook balance.
(i) Cheques issued but not yet presented for payment: the business credits its cash book on issuing the cheque, but the bank debits the account only when the payee presents it. Effect: passbook balance is more than the cash book balance. (1 mark)
(ii) Cheques deposited but not yet collected: the business debits its cash book on depositing the cheque, but the bank credits the account only after clearing. Effect: passbook balance is less. (1 mark)
(iii) Bank charges or interest on overdraft debited by the bank: the bank deducts them directly and the business learns of them only from the statement. Effect: passbook balance is less. (1 mark)
(Other valid causes: amounts deposited directly by customers, interest/dividend collected by the bank → passbook more; payments on standing instructions, dishonoured cheques/bills → passbook less.)
From the following particulars, prepare a Bank Reconciliation Statement of Rao Book Depot as on 31 May 2026:
| (i) | Balance as per cash book | ₹36,400 |
| (ii) | Cheques issued but not presented for payment | ₹8,250 |
| (iii) | Cheques deposited but not yet credited by the bank | ₹5,600 |
| (iv) | Bank charges debited by the bank, not in cash book | ₹120 |
| (v) | Interest credited by the bank, not in cash book | ₹430 |
| (vi) | Insurance premium paid by the bank on standing instructions, not in cash book | ₹2,500 |
Bank Reconciliation Statement of Rao Book Depot as on 31 May 2026
| Particulars | (+) ₹ | (−) ₹ |
|---|---|---|
| Balance as per cash book | 36,400 | |
| Cheques issued but not presented for payment | 8,250 | |
| Interest credited by the bank | 430 | |
| Cheques deposited but not yet credited | 5,600 | |
| Bank charges debited by the bank | 120 | |
| Insurance premium paid by the bank | 2,500 | |
| Balance as per passbook | 36,860 | |
| 45,080 | 45,080 |
Balance as per passbook = ₹36,860 (favourable). (½ mark for each item, 1 mark for the heading and the correct balance.)
On 30 June 2026, the passbook of Singh Auto Parts showed an overdraft of ₹24,000. Prepare a Bank Reconciliation Statement to find the balance as per cash book:
| (i) | Cheques issued but not presented for payment | ₹5,500 |
| (ii) | Cheques deposited but not yet collected | ₹7,200 |
| (iii) | Interest on overdraft debited in the passbook only | ₹640 |
| (iv) | Bank charges debited in the passbook only | ₹110 |
| (v) | Interest on investments collected by the bank, not in cash book | ₹1,800 |
Bank Reconciliation Statement of Singh Auto Parts as on 30 June 2026
| Particulars | (+) ₹ | (−) ₹ |
|---|---|---|
| Overdraft as per passbook | 24,000 | |
| Cheques deposited but not yet collected | 7,200 | |
| Interest on overdraft not entered in cash book | 640 | |
| Bank charges not entered in cash book | 110 | |
| Cheques issued but not presented for payment | 5,500 | |
| Interest on investments collected by the bank | 1,800 | |
| Overdraft as per cash book | 23,350 | |
| 31,300 | 31,300 |
Working: −24,000 + 7,200 + 640 + 110 − 5,500 − 1,800 = −23,350. The balancing figure falls in the (+) column, so the cash book shows an overdraft of ₹23,350 (credit balance).
On 31 July 2026, the bank column of the cash book of Anand Electricals showed a debit balance of ₹48,500. On comparing it with the bank statement, the following were found:
(a) Cheques of ₹19,000 were issued in July, of which cheques of ₹13,200 were presented for payment before 31 July.
(b) Cheques of ₹22,000 were deposited in July, of which only ₹16,500 were credited by the bank before 31 July.
(c) Bank charges ₹280 and interest on investments ₹1,650 collected by the bank appeared only in the bank statement.
(d) A cheque of ₹2,400 received from Kapil, recorded in the cash book and deposited, was dishonoured; the dishonour was not recorded in the cash book.
(e) The receipts side of the bank column of the cash book was overcast by ₹500.
(f) The bank wrongly credited ₹900 to the firm's account; it belonged to another customer.
Prepare the amended cash book (bank column) and a Bank Reconciliation Statement as on 31 July 2026.
Sorting: (c), (d) and (e) concern the firm's own book → amended cash book. (a), (b) and (f) are the bank's delays or error → BRS. Unpresented cheques = 19,000 − 13,200 = ₹5,800; uncollected cheques = 22,000 − 16,500 = ₹5,500.
Amended Cash Book (Bank column) of Anand Electricals
| Dr. | Cr. | ||||
|---|---|---|---|---|---|
| Date | Particulars | ₹ | Date | Particulars | ₹ |
| 2026 Jul 31 | To Balance b/d | 48,500 | 2026 Jul 31 | By Bank Charges A/c | 280 |
| Jul 31 | To Interest on Investments A/c | 1,650 | Jul 31 | By Kapil's A/c (cheque dishonoured) | 2,400 |
| Jul 31 | By Error in casting (receipts overcast) | 500 | |||
| Jul 31 | By Balance c/d | 46,970 | |||
| 50,150 | 50,150 | ||||
Bank Reconciliation Statement of Anand Electricals as on 31 July 2026
| Particulars | (+) ₹ | (−) ₹ |
|---|---|---|
| Balance as per amended cash book | 46,970 | |
| Cheques issued but not presented (19,000 − 13,200) | 5,800 | |
| Amount wrongly credited by the bank | 900 | |
| Cheques deposited but not credited (22,000 − 16,500) | 5,500 | |
| Balance as per passbook | 48,170 | |
| 53,670 | 53,670 |
Correct bank balance (amended cash book) = ₹46,970; balance as per passbook = ₹48,170. (Amended cash book 3 marks, BRS 3 marks.)
Pooja runs Pooja Garments in Bulandshahr. On 31 August 2026 her cash book shows a bank balance of ₹27,300 (debit). Her bank statement for August shows a different balance. On checking, her son finds: (1) a cheque of ₹6,200 given to a cloth supplier on 29 August has not yet been presented to the bank; (2) a customer's cheque of ₹4,100, deposited on 31 August, will be credited only on 2 September; (3) the bank has deducted ₹90 as SMS and service charges; (4) a regular customer has paid ₹3,500 directly into her account by UPI. Items (3) and (4) are not yet in the cash book.
(i) Which of the four items should Pooja record in her cash book now, and why? (1 mark)
(ii) What is the balance as per the amended cash book? (1 mark)
(iii) Prepare a short BRS starting from the amended balance and find the balance as per passbook. (1 mark)
(iv) Is the passbook balance a debit or a credit balance in the bank's books? Explain. (1 mark)
(i) Items (3) and (4). They are real transactions already recorded by the bank that Pooja has not yet recorded. Items (1) and (2) are already correctly recorded by her; only the bank is waiting.
(ii) Amended cash book = 27,300 − 90 + 3,500 = ₹30,710 (debit).
(iii) BRS: Balance as per amended cash book 30,710 + cheque issued not presented 6,200 − cheque deposited not credited 4,100 = ₹32,810 as per passbook.
(iv) It is a credit balance. For the bank, Pooja's deposit is money it owes to her, so her account in the bank's books is a creditor's account. A debit balance in the passbook would mean an overdraft.
4 topper-level HOTS problems for this chapter, with hints and full solutions.