1. Meaning

A Bank Reconciliation Statement (BRS) is a statement prepared to reconcile (match) the balance shown by the Cash Book (Bank Column) as per the firm's own records with the balance shown by the Pass Book / Bank Statement as per the bank's records, as on a particular date.

It is not an account; it is a statement prepared separately.
It explains the reasons for difference, not create new entries in the books.

2. Why Cash Book and Pass Book Differ (Causes)

#	Cause	Effect
1	Cheques issued but not yet presented for payment	Cash book balance already ↓; Pass book shows higher balance
2	Cheques deposited but not yet collected/credited by bank	Cash book shows higher balance; Pass book lower
3	Bank charges/commission debited by bank, not yet recorded in cash book	Pass book balance lower
4	Interest credited by bank, not yet entered in cash book	Pass book balance higher
5	Direct deposits by customers into bank (not recorded in cash book)	Pass book balance higher
6	Direct payments/standing instructions by bank (insurance premium, EMI etc.)	Pass book balance lower
7	Dishonour of cheque (received & deposited) recorded by bank but not by firm	Pass book balance lower
8	Interest on overdraft charged by bank, not recorded in cash book	Pass book balance lower
9	Errors by the firm or by the bank (wrong posting, wrong amount, omission)	Either direction
10	Cheques deposited/entered in cash book but omitted to be sent to bank	Cash book balance higher

3. Golden Rule for Adjustment (Starting from Cash Book Balance)

When starting with Cash Book (Bank) balance to arrive at Pass Book balance:

Item	Treatment
Cheques issued but not presented	Add
Cheques deposited but not collected	Subtract
Bank charges/commission not in cash book	Subtract
Interest/dividend credited by bank, not in cash book	Add
Direct deposit by customer in bank	Add
Direct payment by bank (LIC, EMI, etc.)	Subtract
Cheque dishonoured	Subtract
Interest on overdraft charged by bank	Subtract
Bank collected bill/interest on our behalf	Add

⚠ If starting from Pass Book balance to arrive at Cash Book balance → simply REVERSE all the above signs.

Memory trick: "What Cash Book doesn't know yet, bank already did."

Simple Table (Most commonly asked format)

Particulars	If Cash Book balance is given (Dr.)	If Pass Book (Overdraft) balance is given
Cheques issued not presented	Add	Subtract
Cheques deposited not collected	Subtract	Add
Bank charges	Subtract	Add
Interest allowed by bank	Add	Subtract
Direct payment by bank	Subtract	Add
Direct deposit by customer	Add	Subtract
Cheque dishonoured	Subtract	Add

4. Specimen Format

Bank Reconciliation Statement as on 31st March, 2024

Particulars	Amount (+)	Amount (−)
Balance as per Cash Book	XXXX
Add: Cheques issued but not presented	XXX
Add: Interest credited by bank	XXX
Less: Cheques deposited but not collected		XXX
Less: Bank charges		XXX
Less: Direct payment by bank		XXX
Balance as per Pass Book	XXXX

5. Solved Example (Typical Exam Style)

Q. On 31st March 2024, the Cash Book of a firm showed a debit balance of ₹25,000. On comparing it with the Pass Book, the following differences were noted:

Cheques issued but not presented for payment: ₹3,500
Cheques deposited but not yet collected: ₹2,000
Bank charges of ₹150 debited by bank not recorded in Cash Book
Interest of ₹300 credited by bank not recorded in Cash Book
A customer directly deposited ₹1,200 into the bank account

Prepare BRS.

Solution:

Particulars	Amount (₹)
Balance as per Cash Book	25,000
Add: Cheques issued but not presented	+3,500
Add: Interest credited by bank	+300
Add: Direct deposit by customer	+1,200
Less: Cheques deposited but not collected	−2,000
Less: Bank charges	−150
Balance as per Pass Book	27,850

6. Frequently Asked (PYQ-Style) Statement-Based Questions

PYQ Type 1

Q. The Pass Book of Mr. X showed a credit balance of ₹18,000 on 31st March. On comparison, it was found that:

Cheques of ₹4,000 deposited but not yet cleared
Cheques of ₹2,500 issued but not presented
Bank collected a bill of exchange of ₹1,000 on behalf of Mr. X, not entered in Cash Book
Bank charges ₹100 not recorded in Cash Book

Find the balance as per Cash Book.

Solution (Start from Pass Book, reverse the rule):

Particulars	Amount (₹)
Balance as per Pass Book	18,000
Add: Cheques deposited not yet cleared	+4,000
Add: Bank charges (not yet in cash book)	+100
Less: Cheques issued but not presented	−2,500
Less: Bill collected by bank	−1,000
Balance as per Cash Book	18,600

(Tip: when going Pass Book → Cash Book, every rule flips.)

PYQ Type 2 — Overdraft Case

Q. As per Pass Book, a firm has an overdraft of ₹10,000 as on 31 March. Cheques issued but not presented ₹5,000; cheques deposited but not collected ₹3,000; interest on overdraft ₹200 not recorded in cash book. Find balance as per Cash Book.

Solution: With overdraft, treat Pass Book balance as negative (credit balance); rules invert again relative to a debit balance case. Safest method: use the fundamental rule — reason from first principles rather than the standard debit-balance table.

Overdraft as per Pass Book = −10,000

Less: Cheques issued not yet presented (bank hasn't deducted yet, so cash book already deducted → cash book shows MORE overdraft) = −5,000

Add: Cheques deposited but not collected (cash book already added, bank hasn't, so cash book shows LESS overdraft) = +3,000

Less: Interest on overdraft not yet in cash book = −200

Overdraft as per Cash Book = −10,000 − 5,000 + 3,000 − 200 = −12,200, i.e., Overdraft of ₹12,200 as per Cash Book

(Overdraft questions are commonly asked to test conceptual clarity — always reason it out rather than mechanically applying the debit-balance table.)

PYQ Type 3 — Missing Figure

Q. Cash Book balance ₹15,000 (Dr). Pass Book shows ₹17,800. Reconciliation shows: cheque deposited not collected ₹2,000; bank charges ₹100 not in cash book; and one more item of "cheque issued not presented" amount not given — find it.

Solution:

Balance as per Cash Book + Cheque issued not presented − Cheque deposited not collected − Bank charges = Pass Book Balance

15,000 + X − 2,000 − 100 = 17,800

X = 17,800 − 15,000 + 2,000 + 100 = 4,900

(This "find the missing item" format is a favourite in JKSSB/SSC-type objective papers.)

7. Quick MCQ-Style Points (Objective/PYQ Style)

BRS is prepared by: the business firm/depositor (not by the bank).
Purpose: to detect errors, frauds, and delays; ensure accuracy of bank balance.
A favourable balance in Cash Book = Debit balance = Asset.
A favourable balance in Pass Book = Credit balance (bank owes money to depositor).
Overdraft in Cash Book = Credit balance; in Pass Book = Debit balance.
BRS can be prepared to find: Cash Book balance from Pass Book balance, or Pass Book balance from Cash Book balance, or a corrected/adjusted cash book balance first.
Some questions ask to first pass adjusting entries in cash book for items like bank charges, interest, dishonoured cheque, direct deposits (since these ARE the firm's transactions the firm must eventually record) and THEN prepare BRS using the corrected cash book balance vs pass book balance for remaining timing differences only.
Only cheques issued but not presented and cheques deposited but not collected are genuine timing differences; all other items should ideally first be entered in the Cash Book to correct it, then reconciled.

8. Exam Strategy Tips (JKSSB FAA)

Always identify the base balance given (Cash Book or Pass Book) before applying rules.
Overdraft questions: reason from first principles, don't blindly apply the standard add/subtract table.
Practice "find the missing figure" questions — very common in objective-type exams.
Remember: BRS itself is NOT a ledger account, so no debit/credit posting, just a reconciling statement.
Distinguish between "correcting the Cash Book" (real entries needed for bank charges/interest/direct deposits/dishonour) vs. "reconciling statement" (only for pure timing differences).

These notes are structured for quick revision + practice. Recommend cross-solving 5–10 more numerical BRS questions

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