Bank Reconciliation Statement is a form that allows individuals to compare the personal bank account records to the bank’s records of the individuals account balance in order to uncover any possible discrepancies.
Since there are timing differences between when data is entered in the bank systems and when data is entered in the individuals system, there is sometimes a normal discrepancies between account balances. The goal of reconciliation is that to solve this discrepancies.
There has some items which can create discrepancies on the bank system and individual system, these are given below –
Items on the cash book (individual systems):
Bank collected fund for individuals account, like it can be from notes. In that case the individual are not able to know the information before the issuance of bank statement.
Electronic Fund Transfer:
In that case transaction happened without issuance of cheque. That is also called online banking system. Before the issuance of bank statement individuals are not known about transaction.
Service charge may have been deducted by the bank, such changes usually not known to the individuals before the issuance of bank statement.
Interest Revenue & Deposit:
If any interest income has been earned by the individual on its bank account; it is not usually entered in individual’s cash account before the issuance of bank statement.
Not Sufficient Fund (NSF) Cheques:
These are the cheques deposited by the individual in bank account but the bank is unable to receive payment due to insufficient funds of the payer account.
In the case a individual deposited in the bank Tk. 876, but the bank entered amount Tk. 867. Here has gap of some amount. This is the bank error.
Items on the Bank Systems:
Deposit in Transit:
Deposit which have been sent by the individual to the bank, but have not been received by the bank at proper time before the issuance of bank statement.
Cheques which have been issued by the individual but were not cleared before the issuance of bank statement. Like clearing cheque.