What is BRS (Bank Reconciliation Statement)?

A bank reconciliation statement is a document that compares the cash balance in a company’s accounting records to the corresponding amount on the bank statement. The statement is used to identify and reconcile any differences between the two records, such as outstanding checks, deposits in transit, or bank fees. The purpose of a bank reconciliation is to ensure that the cash balance in the company’s records is accurate and that all transactions have been recorded properly.

Method of Preparation of Bank Reconciliation Statement

There are several steps involved in preparing a bank reconciliation statement, including:

1. Gather all necessary information: This includes the company’s cash balance per its own records and the balance per the bank statement, as well as any other relevant information such as outstanding checks or deposits in transit.
2. Compare the two balances: The cash balance per the company’s records should be compared to the balance per the bank statement to identify any discrepancies.
3. Identify and record any outstanding checks: Any checks that have been written by the company but have not yet cleared the bank should be identified and recorded.
4. Identify and record any deposits in transit: Any deposits that have been made by the company but have not yet been reflected on the bank statement should be identified and recorded.
5. Identify and record any bank charges or credits: Any bank charges or credits that have been applied to the account should be identified and recorded.
6. Adjust the cash balance per the company’s records: Any discrepancies identified in steps 3 through 5 should be used to adjust the cash balance per the company’s records.
7. Prepare the bank reconciliation statement: The information gathered and recorded in steps 1 through 6 should be used to prepare the bank reconciliation statement, which will show the adjusted cash balance per the company’s records and the reconciled balance per the bank statement.
8. Review and sign off the statement by authorized person: It is important to note that this process should be done on regular basis, and any discrepancies should be investigated and resolved promptly.