How to Use This Page
Solve each Samacheer Kalvi exercise question on your own first, then compare your method and answer. Bank Reconciliation Statement (BRS) is a highly numerical chapter — practise the format until you can prepare a BRS from either balance without hesitation.
Key Concepts (Quick Recap)
- Bank Reconciliation Statement (BRS): A statement prepared to find out the reasons for the difference between the cash book bank balance and the pass book bank balance on a given date
- Cash book bank column: The bank account maintained by the business in its cash book
- Pass book: The bank statement sent by the bank to the account holder showing all transactions
- Favourable balance: Debit balance in cash book (money available in bank) = Credit balance in pass book
- Unfavourable balance / Overdraft: Credit balance in cash book (money overdrawn) = Debit balance in pass book
- Timing differences:
- Cheques issued but not yet presented: Deducted in cash book but not yet in pass book
- Cheques deposited but not yet collected/credited: Added in cash book but not yet in pass book
- Bank charges/interest: Recorded by bank but not yet in cash book
- Direct deposits/payments by bank: Recorded by bank but not yet in cash book
- Errors: Mistakes in cash book (overcasting, undercasting, wrong posting) or in pass book
BRS Format (Starting from Cash Book Favourable Balance)
Bank Reconciliation Statement as on [Date]
Particulars | Amount (₹) | Amount (₹)
-------------------------------------------------------|-------------|------------
Bank balance as per Cash Book (Dr) | | XXXX
Add: Cheques deposited but not yet collected | XXXX |
Interest credited by bank | XXXX |
Direct deposits by customers into bank | XXXX |
Dividend collected by bank | XXXX |
Wrong credit in pass book | XXXX |
Deduct: Cheques issued but not yet presented | XXXX |
Bank charges | XXXX |
Interest debited by bank (on overdraft) | XXXX |
Direct payments by bank (insurance, etc.) | XXXX |
Wrong debit in pass book | XXXX |
-------------------------------------------------------|-------------|------------
Balance as per Pass Book (Cr) | | XXXX
I. Choose the Best Answer (MCQs)
Q1. A Bank Reconciliation Statement is prepared to reconcile the difference between (a) Cash book and pass book balances (b) Trading account and P&L account (c) Journal and ledger (d) Purchase book and sales book
Answer(a) Cash book and pass book balances — BRS reconciles the balance as per the cash book (bank column) with the balance as per the pass book on a given date.
Q2. When a cheque is issued but not yet presented, it is (a) Added in BRS starting from cash book balance (b) Deducted in BRS starting from cash book balance (c) Added in BRS starting from pass book balance (d) Both (b) and (c)
Answer(d) Both (b) and (c) — An unpresented cheque is deducted when starting from the cash book balance (because it's already deducted in the cash book but not yet in the pass book) OR added when starting from the pass book balance (because it's not yet deducted by the bank).
Q3. Bank charges debited by the bank but not recorded in the cash book will be (a) Added to cash book balance (b) Deducted from cash book balance (c) Added to pass book balance (d) Ignored
Answer(b) Deducted from cash book balance — Bank charges reduce the bank balance. Since they are already in the pass book but not in the cash book, we deduct them when starting from the cash book balance.
Q4. A favourable bank balance means (a) Debit balance in cash book (b) Credit balance in cash book (c) Debit balance in pass book (d) Zero balance
Answer(a) Debit balance in cash book — A favourable balance means money is available in the bank. In the cash book, it appears as a debit balance.
Q5. Interest credited by the bank but not recorded in the cash book is (a) Added to the cash book balance in BRS (b) Deducted from the cash book balance in BRS (c) Added to the pass book balance (d) Ignored
Answer(a) Added to the cash book balance in BRS — Interest credited by the bank increases the bank balance. Since it's in the pass book but not yet in the cash book, we add it when starting from the cash book balance.
II. Fill in the Blanks
1. A Bank Reconciliation Statement is prepared to reconcile the difference between cash book and pass book balances. 2. Cheques issued but not yet presented are added when starting from the pass book balance. 3. Cheques deposited but not yet collected are added when starting from the cash book balance. 4. Bank charges not recorded in the cash book are deducted from the cash book balance in BRS. 5. A debit balance in the cash book indicates a favourable bank balance. 6. A credit balance in the cash book indicates an unfavourable bank balance (overdraft). 7. When starting from the pass book balance, unpresented cheques are added. 8. The pass book is issued by the bank to the account holder. 9. Direct deposit by a customer into the bank is added to the cash book balance in BRS. 10. Overcasting of the bank column on the debit side of the cash book will result in excess balance in the cash book.
III. True or False (with corrections for false statements)
Q1. A Bank Reconciliation Statement is prepared by the bank.
AnswerFalse — Correction: A BRS is prepared by the business (account holder), not by the bank.
Q2. A favourable bank balance means the business has money in the bank.
AnswerTrue — A favourable (debit) balance in the cash book's bank column means the bank owes money to the business — i.e., money is available.
Q3. Unpresented cheques are already recorded in the pass book.
AnswerFalse — Correction: Unpresented cheques are cheques issued by the business and recorded in the cash book but NOT YET presented to the bank for payment. They are not yet in the pass book.
Q4. Bank interest credited is added when starting from the cash book balance.
AnswerTrue — Bank interest credited increases the balance. Since it's in the pass book but not yet in the cash book, it is added to the cash book balance in BRS.
Q5. An overdraft means the business has withdrawn more than its deposit.
AnswerTrue — An overdraft (unfavourable balance) means the bank balance is negative — the business has withdrawn more than what was deposited.
IV. Match the Following
| Column A | Column B | Answer |
|---|
| 1. Unpresented cheque | (a) Added when starting from pass book | (a) Added when starting from pass book |
| 2. Uncredited cheque | (b) Deducted when starting from pass book | (c) Added when starting from cash book |
| 3. Bank charges | (c) Added when starting from cash book | (b) Deducted when starting from pass book |
| 4. Interest credited by bank | (d) Deducted when starting from cash book | (c) Added when starting from cash book |
| 5. Direct deposit by customer | (e) Already in both books | (c) Added when starting from cash book |
V. Answer Briefly (2-mark questions)
Q1. What is a Bank Reconciliation Statement? Why is it prepared?
Answer
A Bank Reconciliation Statement (BRS) is a statement prepared to reconcile the difference between the bank balance as per the cash book and the bank balance as per the pass book on a given date. It is prepared to: 1. Identify the causes of difference between the two balances 2. Update the cash book for items not yet recorded 3. Ensure accuracy of bank transactions 4. Detect errors and frauds
Q2. Give four reasons for the difference between cash book and pass book balances.
Answer
1. Cheques issued but not yet presented: Deducted in cash book but not yet in pass book 2. Cheques deposited but not yet collected: Added in cash book but not yet credited by bank 3. Bank charges and interest: Recorded by bank but not yet in cash book 4. Direct deposits by customers into bank: Recorded by bank but not yet in cash book
Q3. What is the effect of unpresented cheques on BRS?
Answer
Cheques issued by the business but not yet presented for payment cause the pass book balance to be HIGHER than the cash book balance (favourable). When starting from the cash book balance, unpresented cheques are DEDUCTED. When starting from the pass book balance, they are ADDED.
Q4. Distinguish between favourable and unfavourable bank balance.
Answer
| Feature | Favourable Balance | Unfavourable Balance | |---|---|---| | Meaning | Money available in bank | Overdraft — more withdrawn than deposited | | Cash book | Debit balance | Credit balance | | Pass book | Credit balance | Debit balance | | BRS starts | Add items to reconcile | Subtract items to reconcile |
VI. Answer in Detail (5-mark questions)
Q1. From the following particulars, prepare a Bank Reconciliation Statement as on 31st March 2024:
Answer
- Bank balance as per cash book: ₹25,000 (Dr)
- Cheques issued but not presented: ₹3,000
- Cheques deposited but not collected: ₹5,000
- Bank charges debited by bank: ₹200
- Interest credited by bank: ₹500
- Direct deposit by a customer: ₹2,000
Bank Reconciliation Statement as on 31st March 2024
Particulars | Amount (₹) | Amount (₹)
-------------------------------------------------------|-------------|------------
Balance as per Cash Book (Dr) | | 25,000
Add: Interest credited by bank (not in cash book) | 500 |
Direct deposit by customer (not in cash book) | 2,000 |
| | 27,500
Less: Cheques deposited but not collected | 5,000 |
Cheques issued but not presented | 3,000 |
Bank charges (not in cash book) | 200 |
| | 8,200
-------------------------------------------------------|-------------|------------
Balance as per Pass Book (Cr) | | 19,300
Wait — let me recheck. When starting from cash book favourable balance:
Particulars | Amount (₹) | Amount (₹)
-------------------------------------------------------|-------------|------------
Balance as per Cash Book (Dr) | | 25,000
Add: Cheques deposited but not collected | 5,000 |
Interest credited by bank | 500 |
Direct deposit by customer | 2,000 |
| | 32,500
Less: Cheques issued but not presented | 3,000 |
Bank charges | 200 |
| | 3,200
-------------------------------------------------------|-------------|------------
Balance as per Pass Book (Cr) | | 29,300
Verification: Cash book 25,000 + Interest 500 + Direct deposit 2,000 − Cheques issued 3,000 − Bank charges 200 + Cheques deposited not collected 5,000 = 25,000 + 500 + 2,000 − 3,000 − 200 + 5,000... Let me redo this carefully.
Correct BRS:
Starting from Cash Book favourable balance (Dr ₹25,000):
Particulars | Plus (₹) | Minus (₹)
-------------------------------------------------------|----------|----------
Balance as per Cash Book | 25,000 |
Add: Cheques deposited but not yet collected | 5,000 |
Interest credited by bank (not in cash book) | 500 |
Direct deposit by customer (not in cash book) | 2,000 |
Less: Cheques issued but not yet presented | | 3,000
Bank charges (not in cash book) | | 200
-------------------------------------------------------|----------|----------
| 32,500 | 3,200
Balance as per Pass Book (Cr) = 32,500 − 3,200 | | 29,300
AnswerBalance as per Pass Book = ₹29,300 (Cr)
Q2. From the following particulars, prepare a BRS as on 31st December 2023:
Answer
- Overdraft as per cash book: ₹10,000 (Cr)
- Cheques issued but not presented: ₹4,000
- Cheques deposited but not collected: ₹6,000
- Bank charges: ₹100
- Interest on overdraft debited by bank: ₹200
Bank Reconciliation Statement as on 31st December 2023
Starting from Cash Book overdraft (Cr ₹10,000):
Particulars | Plus (₹) | Minus (₹)
-------------------------------------------------------|----------|----------
Overdraft as per Cash Book (Cr) | | 10,000
Add: Bank charges (not in cash book) | | 100
Interest on overdraft (not in cash book) | | 200
Cheques deposited but not collected | 6,000 |
Less: Cheques issued but not presented | 4,000 |
-------------------------------------------------------|----------|----------
| 10,000 | 10,300
Overdraft as per Pass Book = 10,300 − 10,000 | | 300
AnswerOverdraft as per Pass Book = ₹300 (Dr)
Q3. Explain the procedure for preparing a Bank Reconciliation Statement.
Answer
Step 1: Note the balance as per the cash book (or pass book) as the starting point. Step 2: Add items that make the pass book balance higher than the cash book balance (when starting from cash book): - Cheques deposited but not yet collected - Interest credited by bank - Direct deposits by customers - Dividend collected by bank - Wrong credit in pass book Step 3: Deduct items that make the pass book balance lower than the cash book balance: - Cheques issued but not yet presented - Bank charges - Interest on overdraft debited by bank - Direct payments by bank (insurance, rent) - Wrong debit in pass book Step 4: The resulting figure should match the pass book balance (or cash book balance if starting from pass book). Note: When starting from the pass book balance, the additions and deductions are reversed.
Common Mistakes to Avoid
- Adding unpresented cheques to the cash book balance: Unpresented cheques are DEDUCTED when starting from cash book balance (they reduce the pass book balance). ADD them only when starting from pass book balance.
- Confusing favourable and unfavourable balance treatment: When the balance is favourable (debit in cash book), add deposits not collected. When unfavourable (overdraft), the treatment reverses.
- Forgetting to reverse adjustments when starting from pass book: Every item is treated OPPOSITELY when starting from the pass book balance instead of the cash book balance.
- Not understanding overdraft BRS: When the cash book shows an overdraft (credit balance), the BRS format changes. Add items that increase the overdraft and deduct items that decrease it.
- Double-counting items: An item should appear in the BRS only ONCE. If a cheque is already recorded in both books, it does NOT appear in the BRS.
- Wrong treatment of bank errors: If the bank makes an error (wrong debit/credit), it is adjusted in the BRS until the bank corrects it.
Exam Checklist
- [ ] Can you define BRS and state its purpose?
- [ ] Can you list at least 5 reasons for differences between cash book and pass book?
- [ ] Can you prepare a BRS starting from the cash book favourable balance?
- [ ] Can you prepare a BRS starting from the pass book balance?
- [ ] Can you prepare a BRS when there is an overdraft (unfavourable balance)?
- [ ] Can you correctly add/deduct: unpresented cheques, uncredited cheques, bank charges, interest, direct deposits?
- [ ] Can you handle errors in the cash book (overcasting, undercasting, wrong posting)?
- [ ] Can you handle errors in the pass book (wrong debit/credit by bank)?
- [ ] Can you verify your BRS answer by cross-checking from the other book?
- [ ] Can you distinguish between favourable and unfavourable bank balance?
