Lakhasly

BANK RECONCILIATION

Introduction:-

1.The possible explanations are:-

(a) Errors in calculation, or recording income and payments, are more likely to have been made by yourself than by the bank, but it is possible that the bank has made a mistake too.(ii) Similarly, you might have made some payments by cheques, and reduced the balance in your account accordingly in the record that you keep, but the person who receives the cheque might not bank it for a while.When a bank prepares your bank statement:

(i) There might be some cheques that you have received and paid into the bank, but which haven't yet been 'cleared' and added to your account so although your own records show that some cash has been added to your account, it hasn't yet been acknowledged by the bank, although it will be added in a very short time when the cheques is eventually cleared.The bank might deduct such amounts, which you are not informed about until you received the bank statement.Why might your own estimate of your bank balance be different from the amount shown on your bank statement?2.3.

BANK RECONCILIATION

Introduction:-

1. 
   

   The cash book of a business is the record of how much cash the business belives that it has in the bank. In the same way, yourself might keep a private record of how much money you think you have in your own personal account at your bank, perhaps by making a note in your cheque book of income received and the cheques you write. If you do keep such a record you will probably agree that when your bank sends you a bank statement from time to time the amount it shows as being the balance in your account is rarely exactly the amount that you have calculated for yourself as being your current balance.

   
   


2. 
   

   Why might your own estimate of your bank balance be different from the amount shown on your bank statement? The possible explanations are:-

   
   

(a) Errors in calculation, or recording income and payments, are more likely to have been made by yourself than by the bank, but it is possible that the bank has made a mistake too.

(b) Bank charges or bank commission. The bank might deduct such amounts, which you are not informed about until you received the bank statement.

(c) Time differences. When a bank prepares your bank statement:

(i) There might be some cheques that you have received and paid into the bank, but which haven't yet been 'cleared' and added to your account so although your own records show that some cash has been added to your account, it hasn't yet been acknowledged by the bank, although it will be added in a very short time when the cheques is eventually cleared.

(ii) Similarly, you might have made some payments by cheques, and reduced the balance in your account accordingly in the record that you keep, but the person who receives the cheque might not bank it for a while. Even when it's banked, it takes a day or two for the banks to process it and for the money to be deducted from your account.

3. If you do keep a personal record of your cash position at the bank, and if you do check your periodic bank statements against what you should have in your account, you will be doing exactly the same thing that the bookkeepers of