Rectification of errors preparation of bank reconciliation Statement

Errors and omissions

Some differences in Cash Book and Bank Statement may be the result of errors committed by the bank or by the person responsible for writing up Cash Book. These errors have to be properly rectified. Followings are the few examples of such errors and omissions.

1. Errors resulting more bank balance in Cash Book

A few examples of such errors and omissions are given below that result into more bank balance in Cash Book.

(a) Cheque/Check omitted to be sent to the bank for collection

Sometimes we receive cheque from debtors, record it in the Cash Book (on debit side in bank column), but forget to send this cheque to bank for collection. Due to this omission Cash Book shows more bank balance while Bank Statement shows less bank Balance.

(b) Issued cheque omitted to be recorded in Cash Book or wrongly recorded in Cash Column

Cheques are issued daily to make payments to creditors. Sometimes a cheque issued to creditors is omitted to be recorded in Cash Book (on credit side in bank column) or wrongly recorded in Cash column of the Cash Book. This errors or omission result into showing more bank balance in Bank Statement.

(c) Wrong casting of bank column or cash book

Sometimes errors may be committed to casting (totaling) the bank column of Cash Book. If the debit side of the Cash Book (Bank Column) is overcast, or if the credit side of the Cash Book (Bank Column) is undercast then Cash Book will show more bank balance as compared to Bank Statement.

(d) Deposited cheque omitted to be recorded or wrongly recorded on the debit column of the bank statement by the bank

Sometimes an error or omission is committed by the bank staff. Suppose on receiving a cheque from debtors, we deposit it into the bank after recording it in the Cash Book. But bank omitted to record it in the Bank Statement or it is wrongly recorded on the debit column of the Bank Statement. Due to this error or omission, the Cash Book will show more bank balance and Bank Statement will show less Bank Balance.

(e) Bank account is wrongly debited by the bank

if the bank has wrongly debited the account in Bank Statement then Cash Book will show more bank balance than that of shown by Bank Statement.

Treatment of errors and omissions resulting more bank balance in Cash Book while preparing the Bank Reconciliation Statement

Whenever by any error or omission Cash Book shows more bank balance as compared to Bank Statement balance, the amount of errors and omissions will be credited to bring down the balance at the level of Bank statement, while preparing the Bank Reconciliation Statement.

2. Errors resulting less bank balance in Cash Book

Following are the few examples of such errors and omissions that result into less bank balance in Cash Book.

(a) Deposited Cheque/Check omitted to be recorded in Cash Book

We receive cheques from our debtors daily and deposit them into the bank. Sometimes after receiving a cheque from debtors we deposit it into the bank but forget to record it in Cash Book (On debit side in Bank Column). Due to this error Cash Book shows less bank balance and Bank Statement shows more.

(b) Wrong casting of Cash Book (Bank Column)

If the debit side of the Cash Book (Bank Column) is undercast or if the credit side of the Cash Book (Bank Column) is overcast, the Cash Book will show less bank balance as compared to Bank Statement balance.

(c) Issued cheque not recorded by the bank

A business concern issues cheques to its creditors daily and pays these cheques. Sometimes we issue a cheque to our creditor and bank pays the amount of the cheque, but forgets to records it in Bank Statement (in withdrawals column). For such mistake, Cash Book shows less bank balance than the Bank Statement balance.

(d) Bank Account is wrongly credited by the bank

If the bank has wrongly credited our Bank account in Bank Statement, then Cash Book will show less bank balance and Bank Statement will show more bank balance.

Treatment of errors and omissions resulting less bank balance in Cash Book while preparing Bank Reconciliation Statement

Whenever by any error or omission Cash Book shows less bank balance as compared to Bank Statement Balance, then the amount of errors and omissions will be debited to bring up the balance at the level of Bank Statement, while preparing Bank Reconciliation Statement.

On a specific date when BRS is prepared, if by any reason Cash Book shows less bank balance than the balance of Bank Statement, then the amount of the item is debited in BRS. On the other hand if by any reason Cash Book shows more bank balance than the balance of Bank Statement then the amount of that item is credited in BRS.