Bank Reconciliation Statement | Study Notes For JAIIB

Learn about the Bank reconciliation statement for JAIIB and learn why a reconciliation statement from the bank is required,  how the bank reconciliation process works, JAIIB topic of bank reconciliation statement benefits, etc. Learners can also download this short note on the Bank reconciliation statement as a PDF using the link below.

A Bank reconciliation statement JAIIB is generated at periodic intervals to reconcile the concern’s cash book balances and the bank’s passbook. The bank statement is received regularly, such as once a month. The cash book entries are compared to the entries in the passbook at the end of each month. The variances in the books’ balances are determined, and a reconciliation statement is created. In the end, this statement provides us with a solid beginning point for: 

• Identifying entries that do not necessitate a change in the cashbook (these entries are present in the cashbook but not in the bank statement). The ‘Adjusted bank balance’ is calculated using these entries.
• Identifying and correcting clerical errors in our cashbook.
• Identifying entries in our cashbook that need to be changed (these entries are present in the statement but not in the cashbook).

Bank Reconciliation Statement | JAIIB Short Notes PDF

Use the link below to download the JAIIB Bank Reconciliation Statement PDF. A sneak peek is added in the blog below.

How To Download Ebooks On Oliveboard?

• Click on the link given
• You will be redirected to login/signup page
• Create an account or sign in if you already have an Olivebaord Account
• You’ll see a message – “Please click here to download the Free Ebook”
• Click on the link to get the PDF

Why Reconciliation Statement From The Bank Is Required

• The preparation of bank reconciliation aids in detecting inaccuracies in the company’s or bank’s accounting records.
• Preparing bank reconciliations every month aid in regularly monitoring a company’s cash flow.
• It functions as a moral check on employees, preventing them from misappropriating funds.

Need For A Bank Reconciliation Statement JAIIB

• Accuracy 
• Check on Entries 
• Rectifying Incorrect Entries 
• Updated Cash Book 
• Detection of Delays 
• Check on Employees’ Dishonest Behavior

How Does The Bank Reconciliation Process Work?

Compare the internal record of transactions and balances to the monthly bank statement to reconcile the accounts. Check each transaction individually to ensure that the sums are correct, and make a note of any discrepancies that require further inquiry. 1 If you don’t want to do it monthly, you can do it daily, quarterly, or any other time frame you like.

All deposits will appear in the credit column on the statement, while withdrawals will appear in the debit column. However, if the withdrawal exceeds the deposit, the account will be debited (overdraft).

JAIIB Bank Reconciliation Statement Benefits

The following are some of the benefits of creating a bank reconciliation statement:

• It allows management to double-check the accuracy of the cash book entries.
• It aids in the detection of errors and the quick rectification of balances.
• It is an extremely significant management control technique.
• It displays the current bank balance at any given time.
• It exposes frauds perpetrated by employees handling cash and checks, allowing management to maintain effective control.

Differences Between A Bank’s Passbook And A Firm’s Cashbook

The following factors contribute to the disparities between the cash book and the bank passbook:

• Bank-issued cheque but not yet deposited for payment 
• Paid cheque in the bank but not yet cleared 
• Bank-issued cheque but not yet deposited for payment 
• Paid cheque in the bank but not yet cleared 
• Bank made direct debit from the customer’s side 
• Cheque/ amount deposited directly to the bank account 
• Bank made direct payment from the customer’s side 
• Cheques deposited/bills discounted dishonoured

In layman’s terms, a bank reconciliation statement is generated at the end of each month to determine the discrepancy between the company’s cash book and bank balance.

As a result, reconciliation checks whether the final page in the banking book touches the green light, indicating that the ending is correct and safe.

When Extracts From The Cash Book And The Passbook Are Provided, How Do You Construct A Bank Reconciliation Statement? 

The following points should be observed when the cash book and pass book extracts are compared.

• Determine the period during which both extracts are available.
• Compare the debit side of the cash book to the credit side of the passbook and the credit side of the cash book to the debit side of the passbook.
• Take into account only rare entries where the time for which both abstracts are offered is common, i.e., the cash book abstract refers to January. The passbook extract is also given for January.
• Take into account only frequent entries when the time for which both abstracts are presented is rare, e.g., the cash book pertains to January, but the passbook relates to February.
• Uncommon entries will appear in the reconciliation statement if the timeframe is the same.
• When the timeframe is different, the reconciliation statement will show common entries.

How To Adjust The Cashbook Balance?

We’ve discovered that certain entries appear first in the passbook, and then these missing entries are merged into the cash book by comparing the passbook to the cash book. The trader must always know the proper bank balance to only issue checks up to the available bank amount. As a result, the accountant makes the appropriate modifications in the cash book and adjusts the cash book balance while creating a bank reconciliation statement.

• You can normally change payments made by the bank as per standing instructions in the cash book.
• Bank fees, such as interest on overdrafts debited by the bank.
• The bank collects interest on securities and dividends on shares.
• Debits in the passbook for cheques that have been dishonored.
• The trader’s customers make direct deposits.
• Mistakes made in the cash book.

Conclusion

This brings us to the conclusion of this Bank reconciliation statement article. Please get in touch with us at Oliveboard if you have any questions. Get more JAIIB Notes here.

FREQUENTLY ASKED QUESTIONS 

• 
  JAIIB Exam Syllabus & Pattern – List of Topics to Prepare
• 
  JAIIB Exam Date – For May & Nov Exam Cycle
• 
  JAIIB Exam – Eligibility, Schedule, Registration Details
• 
  JAIIB Eligibility Criteria – Age Limit, No. of Attempts
• 
  JAIIB Admit card – Steps to Download and Updates
• 
  JAIIB Registration & Apply Online – Steps to Fill the Application Form