Bank Reconciliation Statement assignments are an essential part of accountancy and business studies. They are an inseparable part of any accountancy curriculum. The students must submit their essays, projects, and papers on time to get a degree.
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If you are thinking about writing a bank reconciliation statement, then here is an article to help you.
What is a Bank Reconciliation Statement?
A bank reconciliation statement (BRS) is a vital document of the company that matches its cash balance to the corresponding amount present in its bank statement. Reconciling the two accounts is highly beneficial to determine the needs for accounting changes. Companies complete bank reconciliation at regular intervals to make sure the cash records are correct. Moreover, bank reconciliation also helps detect any cash manipulations or fraud.
Why Prepare a Bank Reconciliation Statement?
It is not essential to prepare a BRS, and there is no fixed date for organizing it. A BRS is usually prepared on a periodical basis to check whether the bank-related transactions are recorded correctly in a cash book’s bank column. BRS is profoundly beneficial to detect errors related to recording transactions. In addition to this, it helps to determine the exact bank balance on a determined date.
How to Prepare a Bank Reconciliation Statement?
Writing a bank reconciliation statement is an essential part of a BRS assignment. Online academic services like infofriendly.com can help you with it. These services have professionals with complete control and expertise in accountancy and business studies to help you complete your assignment on time. Below mentioned are the steps to prepare a bank reconciliation statement.
- The first step of writing a BRS is comparing the bank statement’s opening balances of the cash book’s bank column. There could be differences in both the reports due to un-presented or uncredited cheques from the previous period.
- The next step is to compare the bank statement’s credit side with the cash book’s bank column’s debit side.
- Now analyze the entries present in both the columns of a passbook and cash book to find out the entries missed on the cash book’s bank column. Make a list of these types of access and make the required adjustments in the cash book.
- The next step is to correct any errors or mistakes in the cash book.
- Calculate the revised and correct balance in the bank column of the cash book.
- Now, you can start the BRS with the updated cash book balance.
- Add the cheques that are unpresented and deduct the cheques that are un-credited.
- Make the required adjustments for the bank errors.
- If the BRS starts with the debit balance according to the cash book’s bank column, you need to add all the amounts mistakenly credited by the bank. Moreover, you have to deduct the charges that have been incorrectly credited by the bank. You need to do vice-versa if the BRS starts with a credit balance.
- The final result should be equal to the balance present in the bank statement.
Benefits of Preparing Bank Reconciliation Statement
Errors in accounting can cause embarrassing issues. They can lead to bounced cheques and annoying calls from suppliers for payments released. Therefore, it is essential to make a bank reconciliation statement. It helps spot fraud and lowers the risk of transactions that could lead to late fees or penalties. Below mentioned are some of the advantages of BRS.
- Detecting Mistakes. A bank reconciliation statement can help in detecting accounting errors that are common in almost every business. These errors include double payments and missed payments.
- Spotting Fraud. A company may not keep the accounting employees from stealing money or declining the payments; however, you can prevent this in the future. Bank reconciliation statements assist you in spotting and detecting fraud transactions. It helps to prevent the employees from falsifying the reconciliations and books.
- Analyzing Interest and Fee. Banks might add penalties, fees, or interest payments to your account. Making a monthly bank reconciliation statement allows you to subtract or add these types of amounts in your book. Moreover, it helps in analyzing the bank interests and fees appropriately.
- Analysing Receivables. BRS helps to confirm all the receipts, which in turn is beneficial to avoid awkward situations. Moreover, it can also help to identify entries for the receipts that you did not deposit.
Tips to Make Efficient Bank Reconciliation Statement
Below mentioned are some tips to make an efficient BRS.
Keep All the Information In-hand. First of all, it is better to have all the needed information and documentation in hand. It helps you to get a better view of things.
Avoid Common Errors
Make sure to avoid common mistakes like:
- Errors related to duplication of entries
- Mistakes with entering dots and commas, as they can cause discrepancies of remarkable value.
- Not accounting for any transaction which could make a difference equal to the amount missed.
- Transposition mistakes while entering amounts in the books.
Banks Can Also Commit Mistakes
Your bank can also make mistakes. It might credit the incorrect deposits or wrong debit amounts. In such cases, when you find errors that do not have any explanations, consult your bank.
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