Need of Reconciliation Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

now let us understand what is a bank
reconciliation statement what is a key
part is a bank reconciliation statement
its first and foremost it is a statement
that means it is not an account it is
not the result of any double entry it is
just a statement a statement could be a
sentence it is just a piece of paper
where you indicate certain differences
so it is not an account there is no
double entry involved in a bank
reconciliation statement it is prepared
by the account holder please note it is
prepared by the account holder and not
by the bank it is called a bank
reconciliation statement but it is not
prepared by the bank what does it do it
identifies the causes of difference
between the bank balance as shown in the
cash book and that shown in the passbook
identifies the causes of difference
between the bank balance as shown in the
cash book and that shown in the passbook
both are bank balances and therefore
should ideally have been the same but
sometimes there is a difference and we
want to know the causes of these
difference by preparing a bank
reconciliation stable also extremely
important is the fact that this is
irrelevant only on a particular date so
a bank reconciliation statement is a
relevant on a particular date it is a
state length not an account it is a
statement which is prepared by the
account holder to identify the causes of
difference between the bank balance as
shown in the cash flow and that's shown
in the passbook on particular data
why do we prepare a bank reconciliation
stick the importance of VRS while do we
need a bank reconciliation state let us
consider the case of a businessman poor
at the end of the one L of January he
has a lot of commitments in fact he
wants to assure certain checks
he calls his accountant ask for the cash
he checks his balance and he sees he has
40 lakhs that is more than sufficient he
wanted to issue a couple of chips 20
lakhs and 15 months it should be fine
however at the same time he gets his
bank statement many looks of the man's
statement he sees that he has 27 links
there is no way he can issue budgets for
20 lakhs and 50lakhs
he has no idea what has happened where
the funds have gone Wiley cash boxes or
tailor and why does the bank statement
say in d7 in Pali he calls his Kasia
tells him he does not understand what is
happening he the cash flow sends for the
accountant and they sit together and
draw up a bank reconciliation statement
indicating why there is a difference in
the balances of Boutros is there a fraud
is there an error or are they all timing
differences differences which are
illegitimate let us try and see what
kinds of errors are located so let us
understand the importance of command
reconciliation state it could help in
locating errors if there has been an
error made by the accountant while
preparing the cash or the bank while
preparing the customers account in its
books they will be identified by
preparing
a bank reconciliation stick like we were
talking about the businessman very often
these huge differences could be due to
undue delay in clearing objects let us
say the reason that there was such a big
difference was due to fortunes being
deposited of ten thousand each
none of of 110 lakhs each which were not
cleared but why was it not clear it is
in the process of clearing and likely
have discussed before it is possible
that we deposit a cheque on day one but
the chick gets clear and money is
credited into the account only on base
sell some of these checks if they are
outstation checks checks where the
customers account is in one city in one
state while repairs account bank account
or bank is located in another city in
another state this would be outstation
checks and it takes sometimes nearly two
weeks to get such checks cleared when we
prepare a bank reconciliation statement
we identify we identify such chicks
which are held up and cleared and if
there has been an onion to delay we are
able to locate the same and try to
ascertain the reasons prevent fraud it
is quite possible that our cashier has
been instructed let us say to deposit
funds at the end of each day into the
bank
the cashier has religiously recorded a
deposit of different sums of money every
day including one however if he does not
death
this cash into the bank but siphons it
off but enters into the cash box so that
the proprietor has no knowledge of the
same while preparing a bank
reconciliation statement while comparing
the balance in the passbook with that in
the cash book these such frauds could
easily be identified another importance
of the bank reconciliation statement is
to arrive at the correct bank balance at
the end of the year what should be the
balance bank balance that should be
shown in the balance sheet is it the one
which is shown as both the cash book is
it the one that is shown as birthday
parcel with the help of the bank
reconciliation statement we are live at
the correct bundles which should be
reflected in the balance sheet we
consider errors we have made we consider
all incomes and expenses which are
relevant for that particular year pass
necessary entries in the cash book and
arrive at the correct platform we will
discuss this in detail when we discuss
the adjusted cash