Bank Reconciliation Statement (BRS): Step-by-Step Guide with Worked Examples (2026)
A complete 10-minute guide to Bank Reconciliation Statements (BRS): timing differences, unpresented cheques, uncleared deposits, bank charges, and worked numerical examples.
Comparing your company’s internal Bank Book cash ledger against the official bank account passbook or statement at month-end almost always reveals a balance mismatch.
A Bank Reconciliation Statement (BRS) is an internal accounting report prepared to explain and reconcile the exact dollar/rupee differences between the balance shown in your company’s ledger and the balance reported by the bank on a specific date.
Without regular bank reconciliations, businesses risk undetected bank charges, unrecorded customer direct deposits, fraudulent cheque clearing, and inaccurate cash flow visibility.
In this comprehensive 10-minute guide, we cover BRS fundamentals: why balances differ, timing vs error discrepancies, a step-by-step reconciliation protocol, worked numerical examples, and automated bank reconciliation workflows.
1. Why Do Cash Book and Bank Statement Balances Differ?
Differences between your internal Cash Book (Bank Column) and Bank Statement fall into three primary categories:
Causes of Balance Differences
├── 1. Transactions Recorded in Cash Book but NOT in Bank Statement
│ ├── Cheques issued to vendors but not yet presented for payment (Unpresented Cheques)
│ └── Cheques deposited in bank but not yet cleared/credited (Uncleared Cheques)
├── 2. Transactions Recorded in Bank Statement but NOT in Cash Book
│ ├── Direct customer payments credited directly into bank account
│ ├── Auto-debit bank service charges, SMS fees, or loan EMIs
│ └── Interest credited by bank on savings/current balances
└── 3. Accounting Errors
├── Wrong entry amounts typed in Cash Book (e.g., ₹5,400 entered as ₹4,500)
└── Bank error in debiting/crediting wrong corporate account
2. The Bank Reconciliation Protocol (Step-by-Step)
Follow this 4-step accounting procedure to reconcile bank accounts:
Step 1: Obtain Company Bank Book & Official Bank Statement for the Month
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Step 2: Tick Off Matching Entries (Cross-check dates, amounts, & voucher numbers)
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Step 3: Identify Unmatched Items (Unpresented cheques, bank charges, direct credits)
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Step 4: Draft BRS Statement starting from Cash Book Balance ──► Arrive at Bank Statement Balance
3. Worked Numerical Example of a Bank Reconciliation Statement
Let us reconcile the books of Apex Traders Pvt Ltd as of 31st March 2026:
- Balance as per Cash Book: ₹1,50,000 (Debit)
- Unpresented Cheques Issued to Suppliers: ₹35,000
- Uncleared Cheques Deposited into Bank: ₹20,000
- Direct Customer Payment Credited in Bank: ₹15,000 (Not in Cash Book)
- Bank Charges Debited by Bank: ₹1,200 (Not in Cash Book)
Bank Reconciliation Statement for Apex Traders Pvt Ltd (As on 31st March 2026):
| Particulars | Add (₹) | Less (₹) | Amount (₹) |
|---|---|---|---|
| Balance as per Cash Book | 1,50,000 | ||
| Add: Unpresented Cheques (Issued but not paid) | 35,000 | ||
| Add: Direct Customer Deposit in Bank | 15,000 | + 50,000 | |
| Subtotal | 2,00,000 | ||
| Less: Uncleared Cheques (Deposited but not credited) | 20,000 | ||
| Less: Bank Service Charges Debited by Bank | 1,200 | - 21,200 | |
| Balance as per Bank Statement (Passbook) | 1,78,800 |
4. Adjusting Cash Book Entries vs BRS Items
Professional accountants divide unmatched items into two groups:
- Items Requiring Journal Entries in Cash Book: Direct bank credits, bank charges, bounced cheques, and interest income must be recorded immediately in your accounting software via Journal Vouchers.
- Items Remaining strictly in BRS: Timing items (unpresented cheques and uncleared deposits) remain on the BRS schedule until they clear in subsequent weeks.
5. Frequently Asked Questions (FAQ)
Q1: How often should a business prepare a Bank Reconciliation Statement?
For high-volume retail or B2B businesses, bank reconciliation should be performed daily or weekly. For small businesses, it must be completed at least monthly during month-end close.
Q2: What is an Overdraft (OD) Bank Reconciliation?
When a corporate bank account operates under an Overdraft (OD/CC) facility with a credit balance, the starting point in the BRS is a Credit (Favorable/Unfavorable) Overdraft Balance, reversing the add/less rules accordingly.
6. Conclusion
Automating bank reconciliation by linking live bank feeds to your accounting software eliminates manual spreadsheet matching, catches fraudulent charges instantly, and guarantees month-end audit accuracy.
👉 Try ForkOST Automated Bank Reconciliation Engine — 14-day free trial, live bank feed integration, auto-matching AI, and 1-click BRS report export.
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