Bank Reconciliation Statement: ISC Class 11 Accounts Notes

What Bank Reconciliation Statement is about

Weightage: Bank Reconciliation Statement belongs to the unit Bank Reconciliation Statement, which CISCE weights at 10 of the 80 marks in the ISC Class XI Accountancy Paper I (Theory). Class XI is examined by the school, so your school sets the paper within this weightage.Source: CISCE ISC Accountancy syllabus, examination year 2028, Class XI unit weightage

Key concepts

Meaning and need for a bank reconciliation statement

In the cash book (bank column) a deposit is a debit and a withdrawal or cheque issued is a credit; a debit balance is a favourable balance and a credit balance an overdraft. In the pass book (the bank's copy of the customer's account), a deposit is a credit and a withdrawal is a debit; a credit balance is favourable and a debit balance an overdraft.

A BRS is a statement prepared on a date to reconcile (explain) the difference between the two balances.

Need / importance:

• Shows the causes of difference and so confirms the accuracy of both records.
• Reveals errors in the cash book or by the bank, and items not yet recorded (charges, interest, direct deposits, dishonoured cheques).
• Helps detect and prevent fraud by staff handling cheques.
• Shows delays in clearing cheques, so the business can follow up.
• Gives the correct bank balance for the balance sheet (through the amended cash book).

Worked example

Suppose a shopkeeper's cash book shows a bank balance of ₹48,000 while the bank statement shows ₹53,050. He says the bank has made a mistake. Why might both be correct? Give two reasons. [2 marks]

Try it first, then show the solutionSolution

1. Cheques he has issued may not yet have been presented to the bank: his cash book shows them as paid, the bank does not.
2. The bank may have credited interest or a customer's direct deposit that he has not yet recorded.

Answer: Timing differences (cheques not yet presented or cleared) and items recorded only by the bank (interest, direct deposits, charges) can make both balances correct.

Causes of difference

A. Timing differences (recorded by the business first):

1. Cheques issued but not yet presented for payment: cash book balance lower than pass book.
2. Cheques deposited but not yet collected / credited: cash book balance higher than pass book.

B. Items recorded by the bank first (the business learns from the statement):

3. Bank charges, interest on overdraft, cheque-book fees: pass book lower.
4. Interest allowed, dividends or interest on investments collected by the bank: pass book higher.
5. Direct deposit by a customer into the account (NEFT, UPI): pass book higher.
6. Payments by standing instruction (insurance premium, loan EMI, telephone bill): pass book lower.
7. Cheque deposited and dishonoured: pass book lower (bank cancels the credit).

C. Errors in the cash book (wrong amount, wrong side, wrong totalling) or by the bank (wrong account, wrong amount).

Worked example

For each item, say which balance is higher, cash book or pass book: (i) cheque of ₹6,000 issued, not presented; (ii) interest on investments ₹1,800 collected by bank; (iii) cheque of ₹3,500 deposited and dishonoured. [3 marks]

Try it first, then show the solutionSolution

1. (i) Cash book has deducted ₹6,000, bank has not: pass book higher.
2. (ii) Bank has added ₹1,800, cash book has not: pass book higher.
3. (iii) Bank has cancelled the ₹3,500 credit; cash book still shows it: cash book higher.

Answer: (i) Pass book higher; (ii) pass book higher; (iii) cash book higher.

The method: start, ask, add or subtract

1. Start from the given balance (cash book or pass book, favourable or overdraft).
2. For each item, ask: has it made the starting balance higher or lower than the other book?
3. If the starting balance is lower because of the item, add it; if higher, subtract it.

Quick table (starting from a favourable cash book balance, to find the pass book balance):

Item	Effect
Cheques issued, not presented	Add
Cheques deposited, not credited	Less
Bank charges / interest on overdraft debited by bank	Less
Interest or dividend credited by bank	Add
Direct deposit by customer	Add
Standing-instruction payment by bank	Less
Cheque dishonoured	Less

Starting from the pass book, every sign reverses. Starting from an overdraft, write the overdraft as a negative figure (or reverse every sign) and the answer, if negative, is an overdraft.

Format: Bank Reconciliation Statement as at ... | Particulars | Plus (₹) | Minus (₹). Balance as per ... ; plus items; minus items; balance as per the other book.

Worked example

Suppose the cash book of Lata Traders shows a favourable bank balance of ₹48,000 on 31st March 2026. Cheques issued ₹22,500 were not presented; cheques deposited ₹16,800 were not credited; bank charges ₹350 and an insurance premium of ₹6,000 paid by standing instruction were not in the cash book; interest of ₹1,200 credited by the bank and a direct deposit of ₹9,000 by a customer were not in the cash book; a cheque of ₹4,500 deposited was dishonoured (not yet in the cash book). Prepare the BRS. [6 marks]

Try it first, then show the solutionSolution

1. Add (cash book balance lower): cheques not presented 22,500 + interest 1,200 + direct deposit 9,000 = ₹32,700.
2. Less (cash book balance higher): cheques not credited 16,800 + charges 350 + insurance 6,000 + dishonour 4,500 = ₹27,650.
3. Balance as per pass book = 48,000 + 32,700 − 27,650 = ₹53,050.

Answer: Balance as per pass book ₹53,050 (credit).

Starting from an overdraft

An overdraft is a negative bank balance. Two safe methods:

Method 1 (signs): write the overdraft as a negative number, apply the same add/less rules as for a favourable balance, and read a negative answer as an overdraft.

Method 2 (reverse the columns): put the overdraft in the minus column and treat each item as usual; if the minus column total is larger, the result is an overdraft.

With an overdraft, interest on overdraft charged by the bank increases the overdraft in the pass book.

Worked example

Suppose the pass book of Raj Motors shows an overdraft of ₹35,000 on 30th June 2026. Cheques issued ₹12,000 were not presented; cheques deposited ₹8,000 were not credited; interest on overdraft ₹1,500 was charged by the bank only; a customer deposited ₹5,000 directly. Find the balance as per the cash book. [3 marks]

Try it first, then show the solutionSolution

1. Start: pass book = −35,000.
2. Cheques not presented: cash book has already paid them, so its balance is lower: −12,000. Cheques not credited: cash book higher: +8,000. Interest on overdraft (in pass book only): cash book higher: +1,500. Direct deposit (pass book only): cash book lower: −5,000.
3. Cash book = −35,000 − 12,000 + 8,000 + 1,500 − 5,000 = −₹42,500.

Answer: Overdraft as per cash book ₹42,500.

BRS from extracts of the cash book and pass book

When both books' entries for a period are given:

1. Tick each entry that appears in both books (receipts in the cash book debit and pass book credit; payments in the cash book credit and pass book debit).
2. The unticked cash book entries are cheques deposited but not credited, or issued but not presented.
3. The unticked pass book entries are items recorded only by the bank (charges, interest, direct deposits, dishonours, standing instructions).
4. Balance both extracts (or use the given balances) and prepare the BRS with the unticked items.

Only items of the current period are unmatched causes; if the opening balances already agreed, earlier items need no adjustment.

Worked example

Suppose in March the cash book shows deposits of Chirag ₹6,400 and Divya ₹3,600 that do not appear in the pass book, and cheques issued to Faiz ₹7,800 and Gopal ₹4,100 that do not appear either. The pass book alone shows interest ₹450 and charges ₹180. Classify these items. [2 marks]

Try it first, then show the solutionSolution

1. Chirag and Divya: cheques deposited but not credited (₹10,000).
2. Faiz and Gopal: cheques issued but not presented (₹11,900). Interest and charges: recorded only by the bank.

Answer: Not credited ₹10,000; not presented ₹11,900; interest ₹450 and charges ₹180 to be entered in the cash book.

Amended (adjusted) cash book, then BRS

The cash book can be corrected for every item that the business should record:

• Items recorded only by the bank: charges, interest, direct deposits, collections, standing-instruction payments, dishonoured cheques.
• Errors in the cash book: wrong amounts, wrong side, wrong totalling or balancing.

These are entered in an Amended Cash Book (bank column): debit side for items that increase the balance; credit side for items that decrease it. Its balance is the correct bank balance, shown in the balance sheet.

The items not in the amended cash book are the timing differences (cheques not presented or not credited) and errors made by the bank. The BRS is then prepared starting from the amended balance, using only these remaining items.

Worked example

Suppose the cash book shows ₹62,400 (Dr). The bank has debited charges ₹450 and credited interest on investments ₹3,600, neither recorded in the cash book. A cheque of ₹5,400 issued was recorded in the cash book as ₹4,500. Find the amended cash book balance. [3 marks]

Try it first, then show the solutionSolution

1. Debit side (increase): interest ₹3,600.
2. Credit side (decrease): charges ₹450; under-recorded payment 5,400 − 4,500 = ₹900.
3. Amended balance = 62,400 + 3,600 − 450 − 900 = ₹64,650.

Answer: Amended cash book balance ₹64,650 (Dr).

Bank Reconciliation Statement in real life

Each concept, met in an everyday situation. Read the situation, answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Topics in this chapter

• BRS with Overdraft, Extracts and the Amended Cash Book
• Bank Reconciliation Statement: Causes of Difference and the Method

Bank Reconciliation Statement: key facts

BRS from cash book (favourable)

Pass book balance = Cash book balance + Cheques issued not presented + Credits by bank only − Cheques deposited not credited − Debits by bank only

Credits by bank only: interest, direct deposits, collections. Debits by bank only: charges, standing instructions, dishonours.

BRS from pass book (favourable)

Cash book balance = Pass book balance − Cheques issued not presented − Credits by bank only + Cheques deposited not credited + Debits by bank only

Overdraft as a signed balance

Overdraft = −(amount); apply the same rules; a negative result is an overdraft

Amended cash book balance

Amended balance = Cash book balance + items increasing it (bank credits, cash book errors understating it) − items decreasing it

Then BRS uses only timing items and bank errors.

Bank Reconciliation Statement: diagrams to practise

Practise each one on paper: draw it from the checklist, then tick off every label.

How the school exam asks Bank Reconciliation Statement

The question patterns to expect, and the method that works for each.

Tricks to remember Bank Reconciliation Statement

Short memory aids. Say each one aloud once, then use it on a question the same day.

• Ask 'higher or lower?'

  If the item makes my starting balance LOWER than the other book, ADD it; if HIGHER, SUBTRACT it.

  Use it when: Every item, from any starting point.

• Mirror books

  Cash book Dr = Pass book Cr. My debit is the bank's credit.

  Use it when: Reading balances and extracts.

• Overdraft = minus

  Write an overdraft as a negative number and use the normal rules; a negative answer is an overdraft.

  Use it when: Overdraft questions.

Bank Reconciliation Statement: exam-level solved questions

Ordered from exam level to HOTS. Cover the solution, write your own, then compare step by step.

Case-study practice (Section A style)

Read the situation, then answer every part. In a school exam set on the board pattern this is a 7-mark question split into 2 + 3 + 2 marks.

Where the marks are

How a typical answer is split into step marks. Show every step: a right final answer alone rarely earns full marks.

Where students lose marks in Bank Reconciliation Statement

The slips examiners see most often, and what to write instead.

• ✗Mistake: Using cash-book signs when starting from the pass book

  Starting from the pass book, every adjustment reverses; copying the cash-book table gives the opposite answer.

  ✓Do this: Do not memorise a table; ask 'is my starting balance higher or lower because of this item?' every time.

  Usually costs: Most of the marks for the statement.

• ✗Mistake: Putting timing items into the amended cash book

  Cheques not presented or not credited are already correctly recorded in the cash book; only the bank is late.

  ✓Do this: Amended cash book = bank-only items + cash book errors. BRS = timing items + bank errors.

  Usually costs: 2-3 marks.

• ✗Mistake: Treating an overdraft as a favourable balance

  An overdraft is negative; adding to it means it falls.

  ✓Do this: Write the overdraft as a negative figure, apply the rules, and label the result.

  Usually costs: 1-2 marks.

• ✗Mistake: Taking the full amount for a wrong recording

  If a cheque of ₹5,400 was recorded as ₹4,500, the error is the difference, ₹900, not ₹5,400.

  ✓Do this: Error = correct amount − recorded amount; decide its direction.

  Usually costs: 1 mark.

• ✗Mistake: Doubling an overcasting

  An overcast of ₹1,000 on the debit side makes the balance ₹1,000 too high, not ₹2,000.

  ✓Do this: Totalling errors affect the balance by the amount of the error; wrong-side postings by twice the amount.

  Usually costs: 1 mark.

Practice questions on Bank Reconciliation Statement

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

1. Q1 · 1 mark · MCQExam level

   A debit balance in the pass book means:
   (a) favourable balance
   (b) overdraft
   (c) cheques not presented
   (d) cash in hand

   Hint

   Mirror image of the cash book.

   Answer

   (b) overdraft.

2. Q2 · 2 marks · Short answerExam level

   Give three reasons why the cash book and pass book balances may differ.

   Hint

   Timing, bank-only, errors.

   Answer

   Cheques issued but not presented; cheques deposited but not credited; bank charges or interest recorded only by the bank (also direct deposits, standing instructions, dishonours, errors).

3. Q3 · 2 marks · Short answerExam level

   Suppose the cash book shows ₹32,000 (Dr). Cheques issued ₹7,500 were not presented and cheques deposited ₹4,800 were not credited. Find the pass book balance.

   Hint

   Add not presented; less not credited.

   Answer

   32,000 + 7,500 − 4,800 = ₹34,700 (Cr).

4. Q4 · 3 marks · Short answerHarder exam level

   Suppose the pass book shows an overdraft of ₹22,000. Cheques deposited ₹9,000 were not credited; cheques issued ₹5,500 were not presented; bank charges ₹300 are not in the cash book. Find the cash book balance.

   Hint

   Start at −22,000.

   Answer

   −22,000 + 9,000 − 5,500 + 300 = −₹18,200: overdraft as per cash book ₹18,200.

5. Q5 · 3 marks · Short answerHarder exam level

   Suppose a cheque of ₹2,700 issued was recorded on the receipts side of the cash book. The cash book shows ₹40,000 (Dr). Ignoring other items, find the pass book balance and the correct cash book balance.

   Hint

   Wrong side: twice the amount.

   Answer

   The cash book is too high by 2 × 2,700 = ₹5,400. If the cheque has been presented, pass book = 40,000 − 5,400 = ₹34,600, and the correct (amended) cash book balance is also ₹34,600.

6. Q6 · 2 marks · Short answerHarder exam level

   Suppose the cash book shows ₹50,000 (Dr) and the pass book ₹47,250 (Cr). The only differences are bank charges of ₹250 and a cheque deposited but not credited. Find the amount of that cheque.

   Hint

   Both make the pass book lower.

   Answer

   Difference = 50,000 − 47,250 = ₹2,750 = 250 + cheque, so the cheque = ₹2,500.

7. Q7 · 2 marks · Short answerHarder exam level

   Explain why the amended cash book balance, not the pass book balance, is shown in the balance sheet.

   Hint

   Timing items.

   Answer

   The amended cash book includes every transaction that has actually happened (including bank-only items and corrections), while the pass book omits cheques issued or deposited that are still in transit. The amended balance is the business's true bank position on that date.

8. Q8 · 3 marks · Short answerHOTS / competency

   Suppose on 31st March the cash book shows an overdraft of ₹15,000. (i) Cheques issued ₹12,500, of which cheques of ₹8,000 were presented in March; (ii) cheques deposited ₹10,000, of which ₹6,500 were credited in March; (iii) interest on overdraft ₹750 charged by the bank. Find the pass book balance.

   Hint

   Only the unpresented and uncredited parts matter.

   Answer

   Not presented = 12,500 − 8,000 = ₹4,500; not credited = 10,000 − 6,500 = ₹3,500. Pass book = −15,000 + 4,500 − 3,500 − 750 = −₹14,750: overdraft ₹14,750.

9. Q9 · 3 marks · Short answerHOTS / competency

   Suppose the debit side of the bank column was undercast by ₹600 and a direct deposit of ₹4,000 by a customer was not recorded. The bank also credited the firm with ₹1,200 belonging to another customer. Which of these go in the amended cash book, and which in the BRS?

   Hint

   Who made the error?

   Answer

   Amended cash book: the undercasting (+₹600) and the direct deposit (+₹4,000), because the firm must correct its own record. BRS: the bank's wrong credit of ₹1,200, because the firm does not record the bank's error; it is shown as a difference until the bank reverses it.

10. Q10 · 3 marks · Short answerHOTS / competency

    Suppose a cash book shows ₹10,500 (Dr) and the pass book shows an overdraft of ₹2,300. Cheques of ₹8,600 were deposited but not credited and bank charges of ₹200 were not recorded in the cash book. Is there any other difference? Find it.

    Hint

    Reconcile and see what is left.

    Answer

    From the cash book: 10,500 − 8,600 − 200 = ₹1,700 (Cr in pass book) expected, but the pass book shows −₹2,300. A further ₹4,000 (1,700 − (−2,300)) of items lowering the pass book is unexplained, e.g. a ₹4,000 cheque dishonoured or a standing-instruction payment, to be investigated.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1. 1.Favourable balance in the pass book is on which side?Show answer

   Credit.

2. 2.From the cash book, cheques deposited but not credited are?Show answer

   Subtracted.

3. 3.Which items go in the amended cash book?Show answer

   Bank-only items and the firm's own errors.

4. 4.Which items stay in the BRS after amending?Show answer

   Timing differences and bank errors.

5. 5.How to treat an overdraft?Show answer

   As a negative balance.

6. 6.A wrong-side posting affects the balance by?Show answer

   Twice the amount.

Quick revision checklist

The night before the exam: can you do each of these without looking?

• ☐Cash book Dr balance = pass book Cr balance (favourable).
• ☐From cash book: add not presented and bank credits; less not credited and bank debits.
• ☐From pass book: reverse every sign.
• ☐Overdraft = negative balance.
• ☐Amended cash book: bank-only items + own errors.
• ☐BRS after amending: timing items + bank errors only.
• ☐Totalling error = amount; wrong side = twice the amount.

Bank Reconciliation Statement: frequently asked questions