@ Shivani

You have both the options available here. You may or may not  pass adjustment entry to bring the balance in books to be same as in pass book. It is not wrong if the bank balance we show in final accounts differ from that in pass books so far as we have a proper BRS. If you want to show separately Cheques deposited but Not Cleared , you are free to do that. But you still have an option not to do. Consistency should be there in the method you follow.

Dear Colleagues,

I have already clarified regarding my misunderstanding of journal entry relating to crediting party twice. The same was brought to notice to me by Ansh. Hence that matter stands resolved.

And yes it is always better to disclose cheque in hand than debiting the bank a/c. It helps to keep a check on the internal control system as well as easily track a particular pending cheque related transaction. But I already clarified that my answer was wrt other than companies where transactions are not so bulk. And internal control system does not exist.

With regards to companies, being it a mandatory disclosure, it is obvious that you need to follow as it is. And debiting bank a/c would obviously be incorrect in such case.

Otherwise also, it would be much better for tracking purpose. But in practicality, not all accountants follow this procedure unless it is mandatorily required to be done as in case of schedule III

I hope I have made it crystal clear. 

@ Shivani,

Originally posted by : Shivani
	But my question that while BRS tells us the reason for difference it does not change bank balance in our books. We only get to know the reason for differnce. Now still on 31-Mar-15 my books show 120000 and banks books show 100000. Now i have to finalise the balance sheet and i have to show bank balance at 100000 and not at 120000. I need to bring down my bank by 20000. and for this i need to pass adjustment entry Cheque deposited but not cleared 20000     To Bank 20000 and on 3-Apr-15 (date of clearing) i need to pass entry Bank 20000   To Cheque depsoited but not cleared 20000

Wrt to this statement,

These entries will take place when BRS is not prepared. I.e in case of situation 2 where BRS is required then in place of this, you can pass these entries. And this is to be done where BRS is not maintained. You cannot implement both at the same time. 

Pass entry in books as

Bank a/c dr. and X a/c cr. on 31/03/2015 in both the cases and prepare Bank Reconciliation Statement

For Balance Sheet preparation the Bank Balance to be taken as Rs.120000/- instead of Actual balance as per Bank Statement (i.e. Rs.100000/-) This is the proper way

Dear Ruchi and Rinkal

Both of you are suggesting that I can either go for BRS and if I dont go for BRS only then i need to pass adjustment entries.

You also suggesting that its fine if my books show Rs. 120000 and bank books show Rs. 100000 on 31-Mar-15 as long as i have BRS prepared.

I need to know that is there any accounting standard or something that says so. I am asking it coz it just sound odd that we show to our shareholders a balance sheet in which bank balance differs from what Bank statement says.

BRS is not a part of final accounts. Its for our internal purpose. Will our Balance Sheet reflect true and fair position if we dont pass adjustment entries.

i just need to clear the concept that why is it ok to NOT pass adjustment entries.

Appreciate your help.

Thanks

@ Shivani:

As long as true and fair view of the  Balance Sheet position is concerned, yes it does if the BRS is prepared or adjustment entries are given. Because there we are not hiding anything, a BRS will form part of notes to accounts 

Thank you all

Happy Gurpurab

@ Shivani

There is no standard or anything which suggests so. It is not wrong that the balance sheet shows a different amount from the banks pass books. As far as true and fair view is concerned, if subsequent events materially alter the position then we must reflect that in our financial statements otherwise it would be completely fine.

Happy Gurpurab !!

Dear Ruchi

i am trying to learn accounts and tax at home by reading books and reading online and seeking help of experts like you.

lot many questions come to my mind.

can you please tell that when do we finalise balance sheet. What i know is that it states our position of business on 31-Mar of each FY.

So on 31-Mar we bring all outstandings and prepaids into account.

I need to know can we after 31-Mar make any changes to last year entries. I feel not but i am not sure.

after 31-mar i feel all entries will be made in next FY.

One more query i have is that some members say that we create outstandings, provisions etc at the end of teh FY.

but we make salary payable due at each month but then we dont make rent due each month.

sometimes we do, sometimes we dont. why so?

do we have to finalise our books at end of each month or only at end of FY.

regards and thanks

Cheque deposited but not cleared is asst or what?

Hey Rinkal,

Can we pass below entries:

For first case,

When check received on 31/03/2015, Check on Hand Dr to Party A/c.

When the same check deposited to bank, let us assume on 15th April, Bank A/c Dr. to Check on Hand.

Through this entries, Bank will be debited only once and the same for the Party.

For second case, I completely agreed with your answer, so I am not adding any further comments.