CHAPTER 1
1.3 BANK RECONCILIATION STATEMENT Every month, individuals and businesses maintaining a Current Account with a bank statement received from the bank. Upon receiving the bank statement, the focus is normally on the ending balance besides the transactions on whatever deposits and payments made. The business expects the ending balance appearing in the bank statement is the same as the amount in the Cash Book (bank column). Thus, the purpose of Bank Reconciliation is to do necessary adjustments to our records in the cash book and come up with the same ending balance as recorded by the bank. It is an analysis explaining the difference between a business’s book balance of cash and its bank statement balance. The Bank Reconciliation Statement must be prepared monthly to justify amounts reported in the Bank Statement and the Bank account kept by the business.
1.3.1 Bank Statement Bank Statement is normally debited for payments or charges, and credited for receipts by the business. Examples of payments and charges cheques drawn in favor of creditors or suppliers, bank charges, direct debits and standing order/instructions. Examples of receipts: deposits of cash or cheques, dividend, interest on current account and bank GIRO credits or credit transfer.
EXAMPLE 1.4
Poli Bank Shah Alam Statement of Account
Account No. 654321 Date
Particulars
Debit
Date: 30 April 2019 Credit
Balance
April 1
Balance b/f
800.50 Cr
April 3
Cash deposit
7,000.00
7,800.50 Cr
April 4
Transfer from branch
2,500.00
10,300.50 Cr
April 6
Cheque book
April 8
70010
5.00
10,295.50 Cr
550.00
9,745.50 Cr 8
