Bank reconciliation statement: format, example and common mismatches
By FynHelp team, Month-end close for CA firms
What a bank reconciliation statement is, the standard format, a worked example with the usual timing differences, and the reasons the two balances differ.
Short answerA bank reconciliation statement (BRS) explains the difference between the balance in your cash book and the balance in the bank's passbook or statement. It lists each reason for the gap, such as cheques issued but not yet presented or deposits not yet credited, and ends with both balances agreeing.
Two records of the same bank account will rarely agree on any given day. The business records a cheque when it writes it; the bank records it when it is cashed. A BRS is the page that explains the gap, so that nothing is hiding in it.
The standard format
| Item | Amount (₹) |
|---|---|
| Balance as per cash book (bank ledger) | A |
| Add: cheques issued but not yet presented | + |
| Add: interest or amounts credited by the bank, not yet in the books | + |
| Less: cheques deposited but not yet credited by the bank | − |
| Less: bank charges and direct debits not yet in the books | − |
| Balance as per bank statement | B (should equal the statement) |
Whether an item is added or subtracted depends on the starting point. The rule that never changes: after you adjust for every difference, the two balances must agree.
A worked example
On 31 August the cash book shows ₹1,50,000. The bank statement shows ₹1,66,500. You find four differences:
| Difference | What it does to the two balances |
|---|---|
| Cheque of ₹20,000 issued on 29 August, not yet presented | The bank still shows the money, so the bank balance is higher by ₹20,000 |
| Cheque of ₹8,000 deposited on 30 August, not yet credited | The books show the money, the bank does not yet, so the bank balance is lower by ₹8,000 |
| Bank charges of ₹500 debited, not yet in the books | The books are higher by ₹500 |
| Interest of ₹5,000 credited by the bank, not yet in the books | The books are lower by ₹5,000 |
Start from the cash book: ₹1,50,000. Add the interest not yet booked (₹5,000) and subtract the bank charges not yet booked (₹500): the corrected cash-book balance is ₹1,54,500. To compare with the bank, add the cheque issued but not presented (₹20,000) and subtract the deposit not yet credited (₹8,000): ₹1,54,500 + ₹20,000 − ₹8,000 = ₹1,66,500. That equals the bank statement, so the account is reconciled. The two items that belong in the books (interest and charges) must then be entered as vouchers.
Why the two balances differ
- Timing differences. Cheques issued but not presented; cheques or cash deposited but not yet credited. These fix themselves when the bank catches up.
- Items only the bank knows. Charges, interest, direct debits, standing instructions, direct credits from customers. These need a voucher in the books.
- Errors. A wrong amount, a transposed figure, a duplicate or a missed entry, in the books or occasionally at the bank.
- Dishonoured cheques. A received cheque that bounced: the books still show the receipt.
Good habits
- Reconcile every month, soon after the statement arrives.
- Carry forward the pending items and clear them next month.
- Investigate any pending cheque that is more than a few months old.
- Keep a short note against every exception, so a reviewer does not have to ask.
Doing this for many clients is the heavy part. See how to reconcile in TallyPrime, and how CA firms automate it.
Frequently asked questions
What is the purpose of a bank reconciliation statement?
To explain the difference between the bank balance in your books and on the bank's statement, so every difference is accounted for and errors are found.
Is a bank reconciliation statement part of the books of account?
It is a working statement prepared from the books and the bank statement. It supports the balance shown in the books; it is not a ledger.
How do you correct a bank charge found during reconciliation?
Pass a voucher for the charge in the bank ledger. It then stops being a reconciling item.
How often should a BRS be prepared?
Monthly at minimum. Businesses with many transactions often do it weekly.
Try it on your own client
Upload a bank statement and your books, and get the matched lines and the exception list ready for review. FynHelp reconciles bank to Tally or Zoho, chases missing documents and drafts a source-traceable MIS that a partner signs off. Start free for 30 days or book a 20-minute demo.
Keep reading
How FynHelp helps
FynHelp runs a CA firm's month-end close in four steps: bank statement and Tally export extraction, bank reconciliation, source-traceable MIS reports and automated document follow-ups. See pricing for CA firms.
FynHelp reads statements and Tally exports, matches bank to books and drafts the MIS. Free to start, no card needed.
Start free trial