CBSE Class 11 Accountancy Bank Reconciliation Statement | BRS Notes, Theory & Practical
CBSE Class 11 Accountancy – Bank Reconciliation Statement
Bank Reconciliation Statement, commonly known as BRS, is an important topic in Class 11 Accountancy. It helps us understand why the bank balance shown by the Cash Book may be different from the balance shown by the Bank Statement/Pass Book.
In this chapter, students learn the meaning, need and preparation of Bank Reconciliation Statement along with practical numerical questions.
These notes are written in simple and easy language for CBSE Class 11 Accountancy students.
1. What is a Bank Reconciliation Statement?
A Bank Reconciliation Statement (BRS) is a statement prepared to explain and reconcile the difference between the bank balance as per Cash Book and the bank balance as per Bank Statement/Pass Book on a particular date.
In simple words:
BRS helps us find out why the balance in our Cash Book is different from the balance shown by the bank.
Example
According to the Cash Book:
Bank Balance = ₹20,000
According to the Bank Statement:
Bank Balance = ₹18,000
There is a difference of:
₹20,000 − ₹18,000 = ₹2,000
BRS helps us identify the reason for this difference.
2. What is a Cash Book?
A Cash Book is a book maintained by the business to record cash and bank transactions.
When a business maintains a bank column in the Cash Book, it records:
Cheques deposited
Cheques issued
Cash deposited into bank
Cash withdrawn from bank
Bank-related transactions known to the business
The balance shown by the bank column of the Cash Book is called the bank balance as per Cash Book.
3. What is a Bank Statement?
A Bank Statement is a statement provided by the bank showing transactions in the customer's bank account.
It generally contains:
Deposits
Cheques issued and presented
Bank charges
Interest credited
Direct deposits
Direct payments
Other bank transactions
The balance shown by the bank statement may differ from the balance shown in the Cash Book because some transactions may be recorded by the bank earlier or later than they are recorded by the business.
4. Why Does the Difference Arise?
The Cash Book and Bank Statement may show different balances because transactions may be recorded at different times.
For example:
A business issues a cheque of ₹10,000 to a supplier.
The business immediately records the cheque in its Cash Book.
However, the supplier may deposit the cheque into their bank account after two or three days.
Until the cheque is presented and processed, the bank has not yet reduced the business's bank balance.
Therefore, the two balances will temporarily differ.
5. Need for Bank Reconciliation Statement
The preparation of BRS is important for several reasons.
1. To Find Reasons for Difference
BRS helps identify why Cash Book and Bank Statement balances are different.
2. To Check Accuracy
It helps in checking the accuracy of bank-related records.
3. To Detect Errors
Errors in the Cash Book or Bank Statement may be identified.
4. To Know Correct Bank Position
It helps the business understand the actual position of its bank account.
5. To Keep Records Up to Date
Transactions appearing in the Bank Statement but not yet recorded in the Cash Book can be identified.
6. To Control Fraud and Misappropriation
Regular reconciliation can help in detecting unusual or incorrect entries.
6. Main Causes of Difference Between Cash Book and Bank Statement
This is the most important part of BRS.
The difference generally arises because of:
Cheques issued but not yet presented for payment.
Cheques deposited but not yet collected/credited by the bank.
Bank charges debited by the bank.
Interest credited by the bank.
Direct deposits by customers.
Direct payments made by the bank.
Dishonour of cheques.
Collection of dividends or interest by the bank.
Errors in the Cash Book.
Errors in the Bank Statement.
Let's understand these one by one.
7. Cheques Issued But Not Yet Presented
Suppose the business issues a cheque of ₹5,000 to a supplier.
The business records it immediately in the Cash Book.
However, the supplier has not yet presented the cheque to the bank.
Therefore:
Cash Book balance decreases.
Bank Statement balance has not yet decreased.
Result
The Cash Book balance will be lower than the Bank Statement balance.
8. Cheques Deposited But Not Yet Collected
Suppose the business deposits a cheque of ₹8,000 into its bank account.
The business records the amount in the Cash Book.
But the bank has not yet collected the cheque.
Therefore:
Cash Book balance increases.
Bank Statement balance has not yet increased.
Result
The Cash Book balance will be higher than the Bank Statement balance.
9. Bank Charges
Sometimes the bank deducts charges from the customer's account.
For example:
Bank Charges = ₹500
The bank immediately reduces the bank balance.
The business may come to know about the charges only when it receives the Bank Statement.
Result
If not yet recorded in Cash Book:
Bank Statement balance will be lower than Cash Book balance.
10. Interest Credited by Bank
Suppose the bank credits interest of ₹1,000 to the business's account.
The bank balance increases.
If the business has not yet recorded this transaction in the Cash Book:
Bank Statement balance will be higher than Cash Book balance.
11. Direct Deposit by a Customer
Sometimes a customer directly deposits money into the business's bank account.
For example:
Customer directly deposits ₹10,000.
The bank records the amount, but the business may not know about it immediately.
Therefore, the Bank Statement balance increases before the Cash Book is updated.
12. Direct Payment by Bank
The business may instruct the bank to make certain payments directly.
Examples:
Insurance premium
Electricity bill
Loan instalment
Standing instructions
If the business has not yet recorded the payment in its Cash Book, the two balances will differ.
13. Dishonour of Cheque
Suppose a cheque of ₹6,000 deposited by the business is dishonoured by the bank.
The bank reverses the credit.
If the business has not yet recorded the dishonour in the Cash Book, the balances will differ.
14. Collection of Dividend or Interest
Sometimes the bank collects dividend or interest on behalf of the business.
The bank credits the amount directly to the business's account.
If the business has not recorded it in the Cash Book:
Bank Statement balance will be higher.
15. Errors in Cash Book
Sometimes the business may make an error while recording a transaction.
Examples:
Wrong amount entered
Transaction omitted
Wrong side of account used
Addition error
Such errors can cause differences between the two balances.
16. Errors in Bank Statement
The bank may also make an error.
For example, a transaction belonging to another customer may be wrongly entered into the business's account.
Such errors need to be identified and corrected.
17. Important Terms Used in BRS
Cheque Issued
A cheque given by the business to another person.
Cheque Presented
A cheque submitted to the bank for payment.
Cheque Deposited
A cheque received by the business and deposited into its bank account.
Cheque Collected
A deposited cheque whose amount has been collected and credited by the bank.
Bank Charges
Charges deducted by the bank for providing banking services.
Direct Deposit
Amount deposited directly into the business's bank account by another person.
18. Starting Point in BRS
A Bank Reconciliation Statement can be prepared by starting with:
Balance as per Cash Book, or
Balance as per Bank Statement/Pass Book.
The treatment of items depends on the starting balance.
This is one of the most important points in practical questions.
19. BRS When Starting with Balance as per Cash Book
Suppose we start with:
Balance as per Cash Book
Then we need to make adjustments for transactions that have caused the difference.
Common Rules
| Item | Effect on Cash Book Balance |
|---|---|
| Cheques issued but not presented | Add |
| Cheques deposited but not collected | Less |
| Bank charges not recorded in Cash Book | Less |
| Interest credited by bank not recorded in Cash Book | Add |
| Direct deposit by customer | Add |
| Direct payment by bank | Less |
| Dividend collected by bank | Add |
| Cheque dishonoured | Less |
Note: These rules assume that the starting point is a favourable/positive balance as per Cash Book. The treatment changes when the starting balance is an overdraft or when the question starts from the Bank Statement.
20. BRS Practical Example – Starting with Cash Book Balance
Question
According to the Cash Book, the bank balance is ₹25,000.
The following differences are found:
Cheques issued but not presented ₹5,000.
Cheques deposited but not collected ₹3,000.
Bank charges ₹500 not recorded in Cash Book.
Interest credited by bank ₹1,000 not recorded in Cash Book.
Prepare a Bank Reconciliation Statement.
Solution
Bank Reconciliation Statement
| Particulars | ₹ |
|---|---|
| Balance as per Cash Book | 25,000 |
| Add: Cheques issued but not presented | 5,000 |
| Add: Interest credited by bank | 1,000 |
| 31,000 | |
| Less: Cheques deposited but not collected | 3,000 |
| Less: Bank charges | 500 |
| Balance as per Bank Statement | 27,500 |
Answer
Balance as per Bank Statement = ₹27,500
21. Another Practical Example
Question
Balance as per Cash Book is ₹40,000.
The following information is available:
Cheques issued but not presented ₹7,000.
Cheques deposited but not collected ₹5,000.
Customer directly deposited ₹4,000 into bank.
Bank charges ₹1,000 were not recorded in Cash Book.
Find the balance as per Bank Statement.
Solution
| Particulars | ₹ |
|---|---|
| Balance as per Cash Book | 40,000 |
| Add: Cheques issued but not presented | 7,000 |
| Add: Direct deposit by customer | 4,000 |
| 51,000 | |
| Less: Cheques deposited but not collected | 5,000 |
| Less: Bank charges | 1,000 |
| Balance as per Bank Statement | 45,000 |
Answer
Balance as per Bank Statement = ₹45,000
22. Shortcut for Students
When starting from Cash Book balance, remember:
ADD
Cheques issued but not presented
Interest credited by bank
Direct deposits
Dividend/interest collected by bank
LESS
Cheques deposited but not collected
Bank charges
Direct payments by bank
Dishonoured cheques
But always read the question carefully because overdraft and the starting point can change the treatment.
23. Overdraft
An overdraft occurs when the amount withdrawn from a bank account is more than the available balance.
In simple words:
Overdraft means the business has withdrawn more money than it has available in the bank account.
The business therefore owes money to the bank.
Important
Questions involving overdraft require special attention because the add/less treatment may change depending on whether the starting point is the Cash Book or Bank Statement.
24. Bank Reconciliation Statement – Basic Format
Bank Reconciliation Statement as on __________
| Particulars | Amount (₹) |
|---|---|
| Balance as per Cash Book | XXX |
| Add: … | XXX |
| Add: … | XXX |
| Less: … | XXX |
| Less: … | XXX |
| Balance as per Bank Statement | XXX |
The exact items depend upon the information given in the question.
25. Steps to Prepare BRS
Students can follow these simple steps.
Step 1
Read the question carefully.
Step 2
Identify the starting balance.
Is it:
Cash Book balance?
Bank Statement balance?
Favourable balance?
Overdraft?
Step 3
Identify each difference.
Step 4
Decide whether the item should be added or deducted.
Step 5
Prepare the BRS in proper format.
Step 6
Calculate the final balance.
Step 7
Check whether the final balance agrees with the other book.
26. Important Theory Questions
Q1. What is a Bank Reconciliation Statement?
A Bank Reconciliation Statement is a statement prepared to reconcile the difference between the bank balance as per Cash Book and Bank Statement on a particular date.
Q2. Why is BRS prepared?
BRS is prepared to identify the reasons for differences between the Cash Book and Bank Statement and to check the accuracy of bank-related records.
Q3. What is the main reason for differences?
The main reason is that transactions may be recorded in the Cash Book and Bank Statement at different times.
Q4. Is BRS an account?
No. BRS is a statement, not an account.
Q5. Is BRS a part of double-entry bookkeeping?
No. BRS is a statement prepared for reconciliation and does not itself form part of the double-entry system.
27. Frequently Asked Practical Questions
Students should practise questions involving:
Cheques issued but not presented.
Cheques deposited but not collected.
Bank charges.
Interest credited by bank.
Direct deposits.
Direct payments.
Dishonoured cheques.
Collection of dividend.
Errors in Cash Book.
Multiple adjustments in one BRS.
Favourable balance.
Bank overdraft.
28. Common Mistakes in BRS
Mistake 1: Not checking the starting point
Always identify whether the question starts with Cash Book or Bank Statement.
Mistake 2: Confusing issued and deposited cheques
Remember:
Issued but not presented → generally Add when starting from favourable Cash Book balance.
Deposited but not collected → generally Less when starting from favourable Cash Book balance.
Mistake 3: Ignoring bank charges
Bank charges reduce the bank balance.
Mistake 4: Forgetting direct deposits
Direct deposits increase the bank balance.
Mistake 5: Ignoring overdraft
The treatment of items changes when the starting balance is an overdraft.
29. BRS Quick Revision Chart
| Particular | Starting from Cash Book – Favourable Balance |
|---|---|
| Cheque issued but not presented | Add |
| Cheque deposited but not collected | Less |
| Bank charges | Less |
| Interest credited by bank | Add |
| Direct deposit | Add |
| Direct payment | Less |
| Dividend collected by bank | Add |
| Dishonoured cheque | Less |
Exam Tip: Do not blindly memorise the table. Understand how each transaction affects the Cash Book and Bank Statement.
30. Difference Between Cash Book and Bank Statement
| Basis | Cash Book | Bank Statement |
|---|---|---|
| Prepared by | Business | Bank |
| Purpose | Records business cash/bank transactions | Records transactions in bank account |
| Bank balance | Balance as per business records | Balance as per bank records |
| Bank charges | Recorded when known by business | Recorded by bank when charged |
| Direct deposit | Recorded when known by business | Recorded by bank directly |
31. Why Students Find BRS Difficult
BRS is usually not difficult because of calculation. The main difficulty is understanding:
Which balance is given?
Which book recorded the transaction first?
Has the transaction been recorded by the bank?
Should the amount be added or deducted?
Is the balance favourable or an overdraft?
Once these questions are answered, BRS becomes much easier.
32. Easy Method to Solve BRS Questions
Before starting the calculation, make a small table:
| Item | Effect |
|---|---|
| Issued but not presented | ? |
| Deposited but not collected | ? |
| Bank charges | ? |
| Direct deposit | ? |
Then determine the effect based on the starting balance.
This simple method can prevent many mistakes.
33. Exam-Oriented Tips
Tip 1
Always write the proper heading:
Bank Reconciliation Statement as on ______
Tip 2
Write the starting balance clearly.
Tip 3
Use separate Add and Less sections.
Tip 4
Do not confuse Cash Book with Bank Statement.
Tip 5
Read every adjustment carefully.
Tip 6
Check your final answer mathematically.
Tip 7
Practise different combinations of adjustments rather than memorising one example.
34. Important Practice Questions
Question 1
Balance as per Cash Book is ₹30,000.
Cheques issued but not presented ₹6,000.
Cheques deposited but not collected ₹4,000.
Bank charges ₹500.
Interest credited by bank ₹1,500.
Prepare BRS.
Question 2
Balance as per Cash Book is ₹50,000.
Direct deposit by customer ₹8,000.
Cheque issued but not presented ₹10,000.
Cheque deposited but not collected ₹7,000.
Bank charges ₹1,000.
Find the balance as per Bank Statement.
Question 3
Prepare a Bank Reconciliation Statement from the following information:
Balance as per Cash Book ₹45,000.
Cheques issued but not presented ₹12,000.
Cheques deposited but not collected ₹9,000.
Interest credited by bank ₹2,000.
Direct payment by bank ₹3,000.
Bank charges ₹500.
35. One-Page Revision
Remember the basic idea:
Cash Book ≠ Bank Statement
Why?
Because some transactions are recorded at different times.
Important causes:
Cheque issued but not presented
↓
Cash Book updated, Bank Statement not updated
Cheque deposited but not collected
↓
Cash Book updated, Bank Statement not updated
Bank charges
↓
Bank Statement updated, Cash Book may not be updated
Direct deposit
↓
Bank Statement updated, Cash Book may not be updated
Interest credited
↓
Bank Statement updated, Cash Book may not be updated
36. Final Summary
A Bank Reconciliation Statement (BRS) is prepared to explain the difference between the bank balance shown by the Cash Book and the Bank Statement.
The major causes of difference include:
Cheques issued but not presented
Cheques deposited but not collected
Bank charges
Interest credited
Direct deposits
Direct payments
Dishonoured cheques
Collection of dividend/interest
Errors
For practical questions, the most important step is to identify the starting balance and nature of the balance before deciding whether an item should be added or deducted.
Remember:
Understand the effect first, then apply Add/Less.
This approach makes Bank Reconciliation Statement questions much easier and reduces mistakes in examinations.
Quick Revision Formula
Starting Balance
+ Add items
− Less items
= Reconciled Balance
Practise regularly and always check the effect of each transaction before preparing the final BRS.
Conclusion
Bank Reconciliation Statement is an important topic in Class 11 Accountancy. It helps us understand and reconcile the difference between the balance shown by the Cash Book and the Bank Statement.
Students should focus especially on cheques issued but not presented, cheques deposited but not collected, bank charges, direct deposits, interest credited and dishonoured cheques. In practical questions, always identify the starting balance first and then decide whether each adjustment should be added or deducted.
With regular practice and a clear understanding of the effect of each transaction, BRS practical questions can be solved easily and accurately.
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