Bank Reconciliation Statement (BRS) is a statement prepared by a business or an individual to reconcile the bank balance in their books with the bank statement. This statement helps to identify any discrepancies between the two and ensures that the bank account is accurate and up-to-date.

The preparation of the BRS involves the following steps:

**Step 1: Collecting Information**

The first step in the preparation of a BRS is to collect all the information related to the bank transactions for a given period. This includes:

- Bank statement: This is a statement provided by the bank, which shows all the transactions that have taken place in the account during the period.
- Cash book: This is a record maintained by the business or individual, which records all the transactions related to the bank account.

**Step 2: Identifying Discrepancies**

After collecting the information, the next step is to identify any discrepancies between the two records. Some of the common discrepancies that may arise are:

- Bank charges: These are charges levied by the bank for various services such as ATM withdrawals, account maintenance, etc. These charges may not have been recorded in the cash book.
- Bank interest: This is the interest earned on the bank account. This may not have been recorded in the cash book.
- Outstanding checks: These are checks that have been issued but have not yet been presented for payment. These checks will not be reflected in the bank statement.
- Deposits in transit: These are deposits that have been made but have not yet been reflected in the bank statement.

**Step 3: Making Adjustments**

Once the discrepancies have been identified, the next step is to make adjustments to the cash book to reflect the correct balance. For example:

- Adding bank interest to the cash book.
- Deducting bank charges from the cash book.
- Adding outstanding checks to the cash book.
- Deducting deposits in transit from the cash book.

**Step 4: Preparing the Reconciliation Statement**

The final step is to prepare the BRS, which reconciles the bank balance in the cash book with the bank statement balance. The BRS typically consists of two columns, one for the cash book balance and the other for the bank statement balance. The two balances are then compared, and any differences are listed as reconciling items. These reconciling items may include outstanding checks, deposits in transit, bank charges, etc.

In conclusion, the preparation of the BRS is an important process that ensures that the bank account is accurate and up-to-date. It helps to identify any discrepancies between the two records and makes the necessary adjustments to reflect the correct balance.

Bank reconciliation statement is prepared for showing the reasons for the difference in balance between pass book and cash book