20 May 2010
Just to share a think rule which i used to follow while doing BRS during my studies...
If you take balance from Cash Book.. Just forgot Cash Book then and think what has happen to your pass book, increased or declined. If increased add the amount..If Decreased deduct the amount.
Same is with Balance as per pass Book....Think about increase or decrease in Cash book and act accordingly.
Example> Balance as per Cash Book xxxxxx
1.Cheque issued not presented in bank...Means the pass book is not showing the payment yet i.e increase in pass book balance...ADD it.
2. Cheque deposited in bank but not cleared...Means included as deposit in Cah Book but not yet cleared in pass book..i.e Pass Book balance is less..so...LESS it.
20 May 2010
I would want to add further...wat is logic behind it...
Basically, difference arises due to the following:-
Cheque issued but not cleared or not presented with bank.
Cheque deposited in bank but not cleared.
Direct deposit made in the bank
Direct account debited by the bank like bank charges
While preparing the BRS, you have to select either bank balance as per cash book or as per pass book. Just like one thread have two sides and to arrive at another you need to start from one side.
I am not going to tell you whether it should be deduced or added in wat case. Its you need to decide on the basis on logic.
Like in first case
Cheque issued but not presented with bank for clearing
Take two parties A and B. A has issued cheque to B. A will enter in his books (Bank book) that the payment of Rs....... is made to B. Now wat will happen....B will go to bank for depositing the cheque and for clearing the bank will sometime and in some cases it happen B vl keep this cheque with himself unless he got the time to go to bank and deposit it. Wat vl happen....the bank vl debit the amount once they get the cheque.....but the B keep it with him for say 2 months.....nw this difference would remain until this cheque is cleared. So to reconcile we should accordingly reduce the balance of pass book to arrive at the balance as bank book and vice versa to arrive at bal as per pass book.
20 May 2010
Another one is Cheque deposited in bank but not cleared.
Lets continue with previous example..... B has got the cheque of Rs.......from A. B will fill the cheque deposit slip and put in drop box. And in his books, increase the balance by RS........ for the cheque recd from A. Nw the bank vl takeout the cheque and accordingly pass it and credit(amount) the balance by this amount. But if the cheque is recd from other state (i.e. outstation) it vl take 3 days to clear and sometimes due to some other reasons it remain uncleared like losing of cheque, wrong account no while filling the cheque deposit slip etc..... So difference would occur and to reconcile you need to add or deduce the balance accordingly.....as told you in previously.
CAclubindia
