What Is a Bank Reconciliation Statement? Format and Types

Quick Answer: A bank reconciliation statement (BRS) is a short schedule, prepared by the account holder, that starts from one balance (the cash book or the bank statement) on a stated date and lists the items that take it to the other. Its standard format is: balance as per cash book, add certain items, less others, equals balance as per bank statement. It is a working document kept with the accounts, not a ledger account.

A bank reconciliation statement is the written proof that two balances agree. It names the business, the bank account and the date, then lines up each reason the cash book figure differs from the bank statement figure, with amounts. The last line must equal the other balance exactly. Accountants file it with the month's records and auditors ask to see it.

A bank reconciliation statement is a document, not a process

People use "bank reconciliation" for two things: the act of comparing records, and the page that results. This article is about the page. If you want the concept first (what is being compared and why), read what bank reconciliation is.

Three features define the statement:

• It is a separate statement. The BRS is not part of the double-entry system. Nothing on it is posted to the ledger directly, and it carries no debit or credit columns in the ledger sense. That is why exam questions describe it as "a separate statement" prepared outside the books.
• It is prepared as at one date. Every figure on it belongs to that cut-off, usually the closing date printed on the bank statement.
• It reconciles two specific balances. The bank column of the cash book (or the cash account in the general ledger) on one side, and the bank statement or passbook on the other.

Who prepares a bank reconciliation statement, and when?

The account holder prepares it: the business, its accountant or bookkeeper, or an individual reconciling a personal account. The bank does not. India's NCERT Class 11 accountancy textbook makes this point with a multiple-choice question whose answer is "account holder in a bank" (NCERT, Chapter 5).

It is prepared each time a statement arrives, so monthly for most accounts. Larger organisations reconcile weekly or daily for busy accounts. It is also prepared at year end even if it was skipped during the year, because the balance sheet cash figure has to be supported.

Inside a company the preparer should not be the person who writes checks or banks receipts. A supervisor reviews the finished statement and signs and dates it.

What goes on a bank reconciliation statement?

A complete statement carries these elements, in this order:

1. Heading. Name of the business, the bank and account (last four digits are enough), and the words "Bank reconciliation statement as at" followed by the date.
2. Starting balance. Usually "Balance as per cash book", with an indication of whether it is a debit (money in the bank) or a credit (overdraft).
3. Additions. Items that make the other balance higher than the starting one.
4. Deductions. Items that make it lower.
5. Closing line. "Balance as per bank statement" (or "as per passbook"), which must equal the figure printed by the bank.
6. Sign-off. Preparer's name and date, reviewer's name and date.

Which items count as additions depends on where you start. Starting from the cash book, checks you issued that the bank has not paid yet are added, because the bank balance is still higher by that amount. Deposits the bank has not credited are deducted. Start from the bank statement instead and every sign flips.

What is the format of a bank reconciliation statement?

Three layouts are in common use. All three are correct; schools and employers simply prefer one.

1. Vertical "add / less" format. One amount column, with sub-headings. This is the traditional commerce-textbook layout and the one most templates follow.

2. Two-column (+) and (−) format. The NCERT textbook shows this alternative, with additions in one column and deductions in another, and both columns totalling to the same figure once the closing balance is placed in the smaller column.

3. Side-by-side "adjusted balances" format. Common in US accounting courses. The left half takes the bank balance to an adjusted bank balance; the right half takes the book balance to an adjusted book balance; the two adjusted figures must match. This layout doubles as the list of entries to journalize, because everything on the book side needs one.

Here is format 1 filled in for a fictional business, Harbor Lane Bakery, as at June 30:

The bank statement for June closed at $12,798.42, so the statement reconciles. The interest and the fee still have to be entered in the cash book, which is why many accountants prefer to adjust the cash book first and keep only timing items on the statement. That variation is explained in the guide to the bank reconciliation statement and cash book.

Types of bank reconciliation statement

Textbooks group BRS questions into types. The categories overlap; one statement can be several types at once.

People also say "balance reconciliation statement" for the same idea applied to any account, such as a supplier statement reconciliation. The bank version is simply the most common.

How to prepare a bank reconciliation statement

Follow these steps for any of the formats:

1. Bring the cash book up to date to the statement date, including any receipts banked on the last day.
2. Get the matching bank statement. If you only have a PDF, a spreadsheet copy is easier to tick and sort. The bank's own CSV download works when it covers the period; for a PDF-only month, QuickBankConvert turns the statement into Excel or CSV rows, and a free account handles 3 statements a month (see pricing for more).
3. Tick matching items in both records, receipts against credits and payments against debits.
4. Classify each unticked item: issued but not presented, deposited but not credited, bank-only charges or credits, or an error by either side.
5. Write the heading and starting balance, then list additions and deductions according to the starting point.
6. Total and compare. The closing line must equal the bank's figure to the cent.
7. Investigate any remainder. A difference left over means a missed item or an arithmetic slip. Transposed digits produce differences divisible by 9.
8. Sign, date and file the statement with the bank statement and supporting lists.

A fully worked case with several error types is in the bank reconciliation example, and the general procedure is in the bank statement reconciliation guide.

Bank statement and bank reconciliation statement: what is the difference?

The names are close, which confuses students and new bookkeepers alike.

The passbook used by many Indian savings and current accounts is the same thing as a bank statement in this comparison: the bank's copy of your account.

Related guides

• What is bank reconciliation?
• Bank reconciliation statement and cash book
• Bank reconciliation example with solution
• Bank reconciliation in Excel