Bank Reconciliation Statement
Definition: A form that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies.

Since there are timing differences between when data is entered in the banks systems and when data is entered in the individual's system, there is sometimes a normal discrepancy between account balances. The goal of reconciliation is to determine if the discrepancy is due to error rather than timing.

Definition2:

The process of comparing and reconciling accounting records with the records presented on the bank statement. Sometimes disrepancies between the records might occur due to the timing differences when the data is recorded in the accounting and in the bank books. The purpose of bank reconciliation is to check whether the disrepancies are due to timing rather than error. 

Bank Reconciliation Statement Process

Causes of differences:

 A transaction relating to bank has to be recorded in both the books : Cash
Book and Pass Book but sometimes it happens that a bank transaction is
recorded only in one book and not recorded simultaneously in other book it causes difference in the two balances.



Example:

Overdraft shown by the passbook of Mr. Murli is Rs 20,000. Prepare bank reconciliation statement on dated December 31, 2001

	Bank charges debited as per passbook Rs 500.
	Cheques recorded in the cash book but not sent to the bank for collection Rs 2,500.
	Received a payment directly from customer Rs 4,600.
	Cheque issued but not presented for payment Rs 6,980.
	Interest credited by the bank Rs 100.
	LIC paid by bank Rs 2,500.
	Cheques deposited with the bank but not collected Rs 3,500.