Bank Reconciliation Statement

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reconcile the differences between cash book and pass book
Prepared by cashier
reduce or tally the CB and passbook

reasons
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1.Time Gap Errors
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cheque issued but not presented for payment (CB less PB high)
Cheque deposited but not credited (CB More PB less)
Direct Deposit by customer into bank (CB less PB More)
Bank charged for paying the expenses on Behalf of company (CB More PB less)
Bank credited interest (CB less PB More)
Cheque Dishonored and dishour charges (CB more - PB less)

2.Errors by Cashier
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Wrong account posting
Wrong amount Posting
Double time posting
Wrong side posting

Accounting terminology
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Imprest system
Amortization - Intangible
Intangible asset - Cannot be seen and cant be touched and do not have physical
existence - But has value (Copyright, patent)
Fictitious Assets - Assets which are not in existence but they are expense in
nature they generate income ( differed revenue expenditure,preliminary exp)
defered revenue expensiture - Expenditure incurred now but benefits will recieve in
future ( Heavy adv exp, R& D expenses)
Capital Expenditure - Amount spent for purchasing the capital goods like machinery
revenue Expenditure - Amount spent for promoting the sales (salaries, general
mainainece)
Non operating exp : expenses which are not relating to main business operations f
the company ( depreciation,Bad debts)
Non Operating income : Incomes which are not relating to main business operations f
the company ( commission recd, int on dep)
Bank overdraft : facility to draw more than available balance in our bank account -
bank will charge interest
Revolving credit : bank pre approved overdraw limit for fixed period
Current asset : Assets which can be convertible into cash in less than one year
Current Liability : Liability which can be payab;e in less than one year
Quick assets : Assets which are easily convertible into cash except Closing stock
Book value: Cost price less depreciation
Reserve: Amount kept aside for meeting future Obligations ex: expansion or business
diversification
Provision: it is created to meet any Known Liability ( Provision for tax, provision
for depreciation) - it will reduce the profit.Its an expense
Capital reserve: Reserve kept aside to purchase fixed assets
Reserve capital - reserve kept asie to meet winding up expenses
General reserve: reserve created for any business purpose
Trade Discount - Wholesale given to retailer on catalogue price .It is not recorded
in books of accounts
Cash Discount: It is given to customer for quick payment of cash. It is recorded in
books of accounts
Debit Note: Purchase returns . It is statenment contains reasons for returning the
goods aganist invoice to the supplier
Credit Note: Sales returns . It is statenment contains reasons for returning the
goods aganist invoice By the customer
Preliminary expenses : expenses spent for registration of the company ( before
starting the company) by the promoter
Non Performing asset : If Customer do not pay emi for a period of 3 months then
bank will treat it as NPA
Good will: the amount paid over the assets minus liabilities
Impairment : Sudden fall in the value of an asset so that we do not provide any
depreciation on that asset