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📘 Chapter 11 Class 11 Accountancy CBSE Code 055

Bank Reconciliation
Statement (BRS)

Understand why your Cash Book Bank balance and the Pass Book balance never match — and how to reconcile them. A guaranteed practical question in CBSE boards. Learn the simple add/less method, causes of differences, and Corrected Cash Book step by step.

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20MCQs
20Quiz Qs
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📌 The Core Idea — Why Two Books Show Different Balances

Think of it like this: Your Diary vs Your Bank's Diary

You maintain a Cash Book where you record every cheque issued and every deposit. The Bank maintains a Pass Book (your bank statement) recording the same transactions from their side. Both record the same money — but because of timing differences and errors, the two balances never exactly match on the same date. BRS is the statement that explains this difference.

1. Meaning of Bank Reconciliation Statement

A Bank Reconciliation Statement (BRS) is a statement prepared to reconcile (explain the difference between) the Bank column balance of the Cash Book and the balance as per the Pass Book (Bank Statement) on a particular date.

Simple definition: BRS is a statement that starts with one balance (Cash Book or Pass Book) and by adding and subtracting the causes of differences, arrives at the other balance. It is NOT a Ledger account. It is NOT part of the accounting books. It is prepared periodically to check accuracy.

2. Cash Book vs Pass Book — Understanding Both

📚 Cash Book (Bank Column)

Maintained by: The Business

Dr. side: Cheques received, deposits made

Cr. side: Cheques issued, withdrawals

Favourable balance: Dr. balance = money in bank

Unfavourable: Cr. balance = Bank Overdraft

🏭 Pass Book (Bank Statement)

Maintained by: The Bank

Cr. side: Deposits received from business

Dr. side: Withdrawals/payments by business

Favourable balance: Cr. balance = money you have

Unfavourable: Dr. balance = Overdraft

Mirror image rule: Cash Book Dr. = Pass Book Cr. and vice versa. When you deposit money, your Cash Book Dr. increases (asset for you) and your Pass Book Cr. increases (liability for bank — they owe you). The direction is always opposite.

3. Causes of Differences

The Cash Book and Pass Book balances differ because of timing differences (transactions recorded in one book but not yet in the other) and errors/omissions. Here are all the causes in simple language:

1

Cheques Issued but Not Yet Presented for Payment

We issued a cheque to a creditor and recorded it in Cash Book Cr. immediately. But the creditor has not yet deposited it in his bank, so the bank has not debited our account yet. Pass Book still shows higher balance.

2

Cheques Deposited but Not Yet Collected

We received a cheque from a debtor and deposited it, recording it in Cash Book Dr. immediately. But the bank takes a few days to clear and credit it. Pass Book still shows lower balance until cleared.

3

Direct Deposits by Customers into Bank

A customer directly deposited money into our bank account. Bank credited the Pass Book immediately but we don't know yet, so Cash Book is not updated. Pass Book shows higher balance.

4

Bank Charges Debited by Bank

Bank deducted service charges, interest on overdraft, etc. directly from our account. Pass Book Cr. reduces (Dr. in Pass Book). We have not recorded this yet, so Cash Book shows higher balance.

5

Interest Credited by Bank

Bank credited interest on our deposit directly. Pass Book Cr. increases. We have not recorded this yet in Cash Book. Pass Book shows higher balance.

6

Direct Payments by Bank (Standing Orders)

Bank paid insurance premium, loan instalment, or other standing orders directly from our account. Debited in Pass Book. We have not recorded it in Cash Book yet. Cash Book shows higher balance.

7

Errors in Cash Book

We made an error — e.g., entered wrong amount in Cash Book, or recorded a cash transaction in the bank column by mistake. This creates a difference that must be corrected.

8

Errors in Pass Book

Bank made an error — credited wrong account or recorded wrong amount. Rare, but causes difference. The bank must be informed to correct it.

4. Need and Importance of BRS

1

Detects Errors and Fraud

Regular BRS preparation catches mistakes in both books and prevents misappropriation of funds by employees.

2

Confirms Actual Bank Balance

Tells the business owner the true bank balance, helping in cash flow planning and avoiding bounced cheques.

3

Identifies Uncleared Cheques

Tracks cheques issued but not yet presented, so the business does not count that money as still available.

4

Updates Cash Book

Bank charges, interest, and direct deposits revealed in BRS allow the Cash Book to be corrected and updated.

5. Method of Preparing BRS — The Add/Less Approach

The most common method starts with the Cash Book Bank balance and adjusts it to reach the Pass Book balance. The golden rule for each adjustment:

Cause of DifferenceEffect on Cash Book vs Pass BookIn BRS (starting from CB balance)
Cheques issued but not yet presentedCB Cr. recorded; PB not yet Cr.ADD to CB balance (PB is higher)
Cheques deposited but not yet collectedCB Dr. recorded; PB not yet Dr.LESS from CB balance (PB is lower)
Direct deposit by customer in bankPB Cr.; CB not recordedADD to CB balance (PB is higher)
Bank charges debited by bankPB Dr.; CB not recordedLESS from CB balance (PB is lower)
Interest credited by bankPB Cr.; CB not recordedADD to CB balance (PB is higher)
Direct payment by bank (standing order)PB Dr.; CB not recordedLESS from CB balance (PB is lower)
Error in CB — excess debitCB shows higher balanceLESS from CB balance
Error in CB — excess creditCB shows lower balanceADD to CB balance
📈 Worked Example — BRS as on 31 March 2026
Given: Cash Book (Bank column) shows Dr. balance ₹45,000 on 31 March 2026. Differences found:
(i) Cheques issued but not presented for payment ₹8,000
(ii) Cheques deposited but not yet credited by bank ₹5,500
(iii) Bank charges debited by bank ₹800
(iv) Interest credited by bank ₹1,200
(v) Direct deposit by customer ₹3,000 (not in Cash Book)
Prepare BRS to find Pass Book balance.
Bank Reconciliation Statement
M/s Sharma Traders  |  As on 31 March 2026
ParticularsAmount (₹)
Balance as per Cash Book (Dr.) — Starting balance45,000
ADD:
(i) Cheques issued but not yet presented for payment8,000
(iv) Interest credited by bank (not in Cash Book)1,200
(v) Direct deposit by customer (not in Cash Book)3,000
Total Additions12,200
LESS:
(ii) Cheques deposited but not yet collected by bank(5,500)
(iii) Bank charges debited by bank (not in Cash Book)(800)
Total Deductions(6,300)
Balance as per Pass Book (Cr.) — Reconciled balance50,900
Check: ₹45,000 + ₹12,200 − ₹6,300 = ₹50,900. Pass Book should show Cr. balance of ₹50,900. If it does, BRS is correct.

6. Preparation of Corrected Cash Book

The Corrected Cash Book (also called Updated or Amended Cash Book) is prepared before the BRS. It corrects the Cash Book for all items that the bank has recorded but the business has not yet recorded — such as bank charges, interest, direct deposits, standing orders.

Simple rule: Items the bank has done but WE haven't recorded → update Cash Book first. Items recorded in Cash Book but bank hasn't done yet → these stay as timing differences in BRS (do NOT enter in Corrected Cash Book).
📈 Corrected Cash Book — From the above example
Corrected (Updated) Cash Book — Bank Column
Dr. Side — AdditionsAmount (₹)
Balance as per original Cash Book (given)45,000
ADD — Items bank credited, not in Cash Book:
Interest credited by bank1,200
Direct deposit by customer3,000
LESS — Items bank debited, not in Cash Book:
Bank charges debited by bank(800)
Corrected Cash Book Balance (Dr.)48,400
Note: Cheques issued but not presented (₹8,000) and cheques deposited but not cleared (₹5,500) are NOT entered in the Corrected Cash Book. These are timing differences — the Cash Book is correct, the bank just hasn't done it yet. The BRS then starts from the Corrected Cash Book balance (₹48,400) and reconciles to Pass Book (₹50,900): Add cheques not presented ₹8,000 − cheques not cleared ₹5,500 = ₹48,400 + ₹2,500 = ₹50,900.

7. Quick Comparison — BRS vs Corrected Cash Book

PointBRSCorrected Cash Book
PurposeExplain difference between CB and PBUpdate Cash Book with bank-only entries
Starting pointCB balance (or PB balance)Original CB balance
Items includedALL causes of differenceOnly items done by bank but not in CB
Timing differencesIncluded (uncleaned cheques etc.)NOT included
ResultArrives at PB balanceArrives at Corrected CB balance
Part of accounts?No — separate statementYes — updates accounting record
⚡ Quick Recall — Chapter 11 BRS Key Points
BRS = Statement prepared to explain difference between Cash Book (Bank column) balance and Pass Book balance on a specific date. Cash Book maintained by the business. Pass Book maintained by the bank. They are mirror images — what is Dr. in one is Cr. in the other. Cheques issued but not presented → ADD to CB balance in BRS (CB is lower than PB). Cheques deposited but not cleared → LESS from CB balance in BRS (CB is higher than PB). Direct deposit by customer, interest credited by bank → ADD to CB in BRS (PB is higher; bank has done it, we haven't). Bank charges, standing orders paid by bank → LESS from CB in BRS (PB is lower; bank has deducted, we haven't). Corrected Cash Book: Update CB for all items done by bank but not in CB. Do NOT include timing differences (unpresented/uncollected cheques). Favourable CB balance = Dr. balance (money in bank). Unfavourable = Cr. balance (Bank Overdraft — we owe bank). BRS is NOT an account. It is NOT part of double entry. It is a memorandum statement prepared periodically. Importance: Detects errors and fraud, confirms actual bank balance, tracks outstanding cheques, helps update Cash Book.
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← Previous
Ch 10: Special Purpose Subsidiary Books
 Next →
Ch 12: Ledger

20 MCQs — Bank Reconciliation Statement

Mixed difficulty — concepts, causes, add/less adjustments, numericals, Corrected Cash Book. Q17–Q20 are CUET-level.

📚 Questions 1 to 20
1
Bank Reconciliation Statement is prepared to:
AReplace the Cash Book
BExplain the difference between Cash Book Bank balance and Pass Book balance
CCalculate profit or loss of the business
DShow all bank transactions in one place
Answer: B. BRS reconciles (explains the difference between) the Cash Book Bank column balance and the Pass Book balance on a given date. It is not part of the accounting books — it is a separate memorandum statement prepared periodically.
2
The Pass Book is maintained by:
AThe business itself
BThe Government
CThe Bank
DThe auditor
Answer: C — The Bank. Pass Book (Bank Statement) is maintained by the bank. It is a copy of the customer's account in the bank's ledger. The Cash Book is maintained by the business. Both record the same transactions but from opposite perspectives.
3
When a cheque is issued to a creditor and recorded in Cash Book, but not yet presented to the bank, what is the effect?
ACash Book balance is higher than Pass Book balance
BPass Book balance is higher than Cash Book balance
CBoth balances are equal
DCash Book shows overdraft
Answer: B — Pass Book balance is higher. We have already reduced Cash Book balance (Cr. entry) but the bank has not yet paid the creditor so bank balance is still the same. Pass Book Cr. balance remains higher than Cash Book balance. In BRS: ADD this to Cash Book balance to reach Pass Book balance.
4
A cheque of ₹10,000 was deposited in the bank but not yet collected. In BRS (starting from Cash Book balance), this is:
AAdded to Cash Book balance
BDeducted from Cash Book balance
CIgnored in BRS
DAdded to Pass Book balance
Answer: B — Deducted. We already recorded the deposit in Cash Book Dr. (increasing our balance) but the bank has not yet credited it. Pass Book shows lower balance. To go from CB to PB, we deduct this amount. Pass Book is lower by ₹10,000.
5
Bank credited ₹2,000 as interest on deposits. This has NOT been recorded in Cash Book. In BRS (from CB balance), this is:
AAdded to Cash Book balance
BDeducted from Cash Book balance
CAdded to Pass Book balance
DNot included in BRS
Answer: A — Added. Bank credited ₹2,000 in Pass Book (increasing PB balance) but we haven't recorded it in Cash Book. Pass Book is higher by ₹2,000. To reach PB from CB, we ADD ₹2,000. This will also need to be entered in Corrected Cash Book.
6
Bank deducted ₹500 as bank charges. Not recorded in Cash Book. In BRS (from CB balance), this is:
AAdded to Cash Book balance
BDeducted from Cash Book balance
CAdded to Pass Book balance
DDeducted from Pass Book balance
Answer: B — Deducted. Bank debited our account (Pass Book Dr. side), reducing Pass Book balance. We haven't recorded this, so Cash Book balance is higher than Pass Book. To reach PB from CB, we DEDUCT ₹500. Also enters Corrected Cash Book as a Cr. entry.
7
A favourable balance as per Cash Book means:
ADebit balance — business has money in bank
BCredit balance — business owes money to bank
CZero balance
DOverdraft situation
Answer: A — Debit balance. In Cash Book, Dr. balance = money we have in the bank (asset). This is favourable. Cr. balance in Cash Book = Bank Overdraft = we owe money to bank (liability) = unfavourable. In Pass Book, it is the reverse: Cr. balance = favourable, Dr. balance = overdraft.
8
A customer directly deposited ₹5,000 into our bank account. Not yet recorded in Cash Book. In BRS (from CB balance), this is:
AAdded to Cash Book balance
BDeducted from Cash Book balance
CNeither — not a cause of BRS difference
DDeducted from Pass Book balance
Answer: A — Added. Bank received ₹5,000 and credited Pass Book. We haven't recorded it, so Cash Book is ₹5,000 lower than Pass Book. To go from CB to PB, ADD ₹5,000. This also needs to be recorded in Corrected Cash Book (Dr. Bank in CB).
9
Which items are included in Corrected Cash Book but NOT in BRS?
ACheques issued but not yet presented
BCheques deposited but not yet cleared
CErrors in Pass Book
DNone — Corrected Cash Book items are a subset of BRS items (both include bank-only items)
Answer: D. Corrected Cash Book contains only items done by bank but not in CB (bank charges, interest, direct deposits). BRS contains ALL causes including timing differences (unpresented cheques, uncleared deposits). Corrected CB items are a subset of BRS items — not exclusive to one.
10
CB balance ₹30,000 Dr. Cheques issued not presented ₹4,000. Cheques deposited not cleared ₹6,000. Pass Book balance is:
A₹28,000
B₹28,000
C₹32,000
D₹40,000
Answer: B — ₹28,000. Start with CB ₹30,000. Add cheques not presented ₹4,000 = ₹34,000. Less cheques not cleared ₹6,000 = ₹28,000 (Pass Book balance). PB = CB + unpresented cheques − uncleared deposits = ₹30,000 + ₹4,000 − ₹6,000 = ₹28,000.
11
Which of the following is NOT a cause of difference between Cash Book and Pass Book?
ACheques deposited but not yet collected
BBank charges debited by bank
CCash sales recorded in Cash Book
DInterest credited by bank
Answer: C — Cash sales. Cash sales are recorded only in the Cash column of Cash Book (not Bank column) and do not affect the bank balance at all. They have no relationship with the Pass Book. All other options are classic causes of difference between CB Bank column and Pass Book.
12
Bank paid insurance premium ₹3,000 on standing order. Not recorded in Cash Book. Effect on BRS (from CB balance):
AAdd ₹3,000 to CB balance
BDeduct ₹3,000 from CB balance
CAdd ₹3,000 to PB balance
DNo effect on BRS
Answer: B — Deduct ₹3,000. Bank debited our account (Pass Book Dr. side, reducing PB Cr. balance). We haven't recorded it in Cash Book. So CB is ₹3,000 higher than PB. Deduct from CB to reach PB. Also enter in Corrected Cash Book: Bank column Cr. ₹3,000 (reduce balance).
13
BRS is prepared on:
AA specific date (periodically)
BDaily, for every transaction
COnly at the end of the financial year
DA specific date (periodically) — monthly or quarterly
Answer: D. BRS is prepared periodically — usually at the end of every month or quarter. It is not prepared for each transaction. The purpose is to periodically verify that both books are consistent and catch errors or fraud early.
14
In Pass Book, a credit balance means:
ABank Overdraft — business owes bank
BFavourable balance — bank owes business
CZero balance
DBusiness has made a loss
Answer: B — Favourable balance. Pass Book is the bank's record of OUR account. A Cr. balance in Pass Book means the bank owes us money — we have that much in the bank. Dr. balance in Pass Book = Bank Overdraft (we owe the bank). This is the mirror of Cash Book where Dr. balance = favourable.
15
Which items from BRS are also entered in the Corrected Cash Book?
ACheques issued but not yet presented
BCheques deposited but not yet collected
CBank charges, interest, direct deposits — items done by bank but not in CB
DAll BRS items without exception
Answer: C. Corrected Cash Book is updated ONLY for items the bank has done but we haven't recorded yet (bank charges, interest earned, direct deposits, standing orders). Timing differences (unpresented/uncleared cheques) are NOT entered — Cash Book is correct for those, bank just hasn't acted yet.
16
CB Bank balance ₹20,000 Dr. Bank charges ₹400 not in CB. Interest ₹600 not in CB. Corrected CB balance is:
A₹21,000
B₹19,000
C₹20,200
D₹20,600
Answer: C — ₹20,200. Start with CB ₹20,000. Less bank charges ₹400 (bank debited, reduces balance) = ₹19,600. Add interest ₹600 (bank credited, increases balance) = ₹20,200. Corrected CB = ₹20,000 − ₹400 + ₹600 = ₹20,200.
17
CUET: CB balance ₹50,000 Dr. Cheques issued not presented ₹12,000. Cheques deposited not cleared ₹8,000. Bank charges not in CB ₹1,000. Direct deposit by customer not in CB ₹4,000. Pass Book balance is:
A₹57,000
B₹57,000
C₹59,000
D₹43,000
Answer: B — ₹57,000. CB ₹50,000 + cheques not presented ₹12,000 + direct deposit ₹4,000 − cheques not cleared ₹8,000 − bank charges ₹1,000 = ₹57,000. Remember: items bank has credited but CB hasn't = ADD; items bank has debited but CB hasn't = LESS; cheques not presented = ADD; not cleared = LESS.
18
CUET: Assertion (A): BRS is part of the double-entry bookkeeping system. Reason (R): BRS adjusts both the Cash Book and Pass Book simultaneously.
ABoth A and R are true, and R correctly explains A
BA is true; R is false
CBoth A and R are false
DA is false; R is true
Answer: C — Both A and R are false. A is false: BRS is NOT part of double-entry bookkeeping. It is a memorandum statement — no journal entry is passed for BRS itself. R is false: BRS does not adjust both books simultaneously. The Corrected Cash Book updates the Cash Book; BRS only explains the difference between the two books.
19
CUET: Pass Book balance ₹35,000 Cr. Cheques issued not presented ₹5,000. Cheques deposited not cleared ₹3,000. Cash Book balance is:
A₹37,000
B₹43,000
C₹33,000
D₹27,000
Answer: C — ₹33,000. Starting from PB ₹35,000. Cheques not presented: PB is higher than CB by this amount, so CB = PB − ₹5,000 = ₹30,000. Cheques not cleared: CB is higher than PB by this amount, so CB = ₹30,000 + ₹3,000 = ₹33,000. Working backwards from PB to CB reverses the add/less directions.
20
CUET: CB balance ₹40,000. Bank charges ₹500 not in CB. Interest ₹800 not in CB. Cheques not presented ₹6,000. Cheques not cleared ₹4,000. What is (i) Corrected CB balance and (ii) Pass Book balance?
A(i) ₹40,300 (ii) ₹40,300
B(i) ₹40,300 (ii) ₹42,300
C(i) ₹42,300 (ii) ₹42,300
D(i) ₹38,700 (ii) ₹40,700
Answer: B. Corrected CB = ₹40,000 − bank charges ₹500 + interest ₹800 = ₹40,300 (timing differences NOT included here). Pass Book = Corrected CB ₹40,300 + cheques not presented ₹6,000 − cheques not cleared ₹4,000 = ₹42,300. Two-step method: first get Corrected CB, then reconcile to PB.

Chapter 11 — Live Quiz

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