This chapter covers the Bank Reconciliation Statement, its necessity, and how to prepare it, emphasizing its importance in financial accounting for accurate record-keeping.
Bank Reconciliation Statement – Formula & Equation Sheet
Essential formulas and equations from Financial Accounting - I, tailored for Class 11 in Accountancy.
This one-pager compiles key formulas and equations from the Bank Reconciliation Statement chapter of Financial Accounting - I. Ideal for exam prep, quick reference, and solving time-bound numerical problems accurately.
Key concepts & formulas
Essential formulas, key terms, and important concepts for quick reference and revision.
Formulas
Balance as per Cash Book = Opening Balance + Total Receipts - Total Payments
This formula calculates the balance in the cash book by summing the opening balance with total receipts and subtracting total payments.
Balance as per Passbook = Total Deposits - Total Withdrawals
This represents the balance in the passbook, calculated by subtracting total withdrawals from total deposits.
Adjusted Cash Book Balance = Cash Book Balance + Cheques Deposited but Not Cleared - Cheques Issued but Not Presented
This formula adjusts the cash book balance by adding uncollected deposited cheques and subtracting cheques issued but not presented.
Bank Charges Not Recorded = Total Bank Charges
Bank charges that have been deducted but not recorded in the cash book are identified here.
Interest Credited by Bank = Total Interest
This denotes any interest credited to the bank account that needs to be accounted for in the cash book.
Adjustment for Errors = Total Errors
This formula accommodates any errors that may have occurred either in the cash book or passbook.
Final Balance = Balance as per Cash Book ± Adjustments
Determines the final balance after all necessary adjustments have been made.
Balance as per Cash Book = Balance as per Passbook + Unpresented Cheques - Uncollected Cheques
This formula helps reconcile the cash book with the passbook by incorporating outstanding cheques.
Overdraft = Liability to Bank
Indicates a negative cash balance where withdrawals exceed deposits.
Bank Reconciliation Statement = Cash Book + (+) Additions - (-) Deductions
This outlines the structure of a bank reconciliation statement, summarizing adjustments needed to match the two balances.
Equations
Cash Book Balance = Opening Balance + Receipts - Payments
This equation summarizes the cash balance at any point based on recorded receipts and payments.
Passbook Balance = Cash Book Balance + Total Deposits - Total Withdrawals
Relates the cash book to the bank records showing how balances can differ.
Bank Charges = Charges - Recorded
This equation computes the impact of unrecorded bank charges on the cash book.
Interest = Credited - Not Recorded
Highlights interest credited by the bank, emphasizing the need to record it in the cash book.
Overdraft = Cash Book Balance - Passbook Balance
Clarifies the situation with an overdraft by showing the difference that indicates bank liabilities.
Unpresented Cheques = Total Issued - Presented
Calculates how much of the issued cheques have yet to be cashed against the bank.
Deposited but Not Cleared = Total Deposits - Total Cleared
This equation assesses how much of the deposited amount remains unprocessed by the bank.
Adjusted Cash Book = Original Cash Book – Bank Charges + Interest
Gives a clearer picture of the cash book balance after accounting for bank transactions.
Difference = Cash Book Balance - Passbook Balance
Helps in identifying the variance between the two records and aids in reconciliation.
Final Reconciliation = Cash Book Adjustments + Passbook Adjustments
Summarizes adjustments needed to achieve parity between the cash book and the passbook.
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