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Bank Reconciliation Statement Method, ISC 11 Accounts

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AccountsISC Class 11 · Bank Reconciliation Statement

Bank Reconciliation Statement: Causes and Method for ISC Class 11 Accounts

Updated 17 October 2026 · Fact-checked

A Bank Reconciliation Statement (BRS) is a statement that explains the difference between the balance in the cash book (bank column) and the balance in the pass book on a given date. It is prepared because of timing differences (cheques issued or deposited but not yet cleared) and items the bank has recorded that the business has not (charges, interest, direct deposits).

Start with the cash book balance, add the green items, subtract the red items, and you arrive at the pass book balance.

Illustration drawn for QuestionBuddy.

Understand Bank Reconciliation Statement: Causes of Difference and the Method

Cash book vs pass book. The cash book is the business's record of its bank account; the pass book is the bank's record of the same account. Debit in the cash book = deposit; credit = withdrawal. The pass book is the opposite: a deposit is a credit and a withdrawal a debit (the bank owes the customer). BRS is not an account; it is a statement and does not change the books.

Need. It detects errors, prevents fraud, and shows the true bank balance.

Causes of difference.
1. *Cheques issued but not yet presented for payment:* cash book already credited, bank not yet debited.
2. *Cheques deposited but not yet collected/credited by the bank:* cash book debited, pass book not yet credited.
3. *Direct deposits by customers, interest or dividend collected by the bank:* credited in the pass book, not yet in the cash book.
4. *Direct payments by the bank* (standing orders, insurance, loan instalments) and *bank charges, interest on overdraft:* in the pass book only.
5. *Dishonour of a cheque deposited:* the bank debits it, the cash book does not know.
6. *Errors* in either book.

Method when starting from the cash book balance (favourable).
Balance as per cash book (Dr)
Add: items that increase the pass book relative to the cash book (cheques issued not presented; interest/direct deposits credited by bank but not in cash book)
Less: items that decrease it (cheques deposited not yet credited; bank charges; direct payments; dishonoured cheques)
= Balance as per pass book.
Reverse the Add and Less when starting from the pass book balance. If the balance is an overdraft (credit in cash book), the signs are reversed.

Rule of thumb. Ask: "Does the item make the bank balance higher or lower than the cash book?" Add to cash book balance if higher, subtract if lower.

Bank Reconciliation Statement: Causes of Difference and the Method: key facts

BRS from cash book
Pass book balance = Cash book balance + Issued not presented + Credited by bank not in cash book - Deposited not collected - Debited by bank not in cash book | Favourable balance
For an overdraft reverse the signs.
Overdraft
Overdraft per cash book: add cheques deposited not credited, less issued not presented | Reverse of the rule
Credit balance in cash book.
Opposite books
Cash book debit = Pass book credit | Cash book credit = Pass book debit
Mirror images.

How to answer Bank Reconciliation Statement: Causes of Difference and the Method questions

Use the "start, ask, add or subtract" method.

  1. 1Note the starting balance and whether it is favourable or overdraft.
  2. 2Take each item and ask whether it makes the other book's balance higher or lower.
  3. 3Add or subtract accordingly.
  4. 4Verify that the result equals the balance of the other book.

Bank Reconciliation Statement: Causes of Difference and the Method in real life

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

Cheque not yet presented

Suppose a shop owner writes a cheque for Rs 5,000 to a supplier on 30 June but the supplier deposits it on 3 July.

Why does the 30 June pass book show Rs 5,000 more than the cash book?

Try it first, then show the solutionSolution
  1. The cash book already credited the bank with Rs 5,000 on 30 June.
  2. The bank does not pay the cheque until 3 July, so its balance is still higher.

Answer: Pass book balance is higher by Rs 5,000; add it when starting from the cash book.

Memory hook: Issued but not presented: bank still has the money.

Tricks to remember Bank Reconciliation Statement: Causes of Difference and the Method

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

  • Start, Ask, Add/Subtract

    Start with a balance, ask what it does to the other book, then add or subtract.

    Use it when: Method.

  • Mirror books

    Cash book Dr is pass book Cr.

    Use it when: Understanding.

  • Overdraft reverses

    Overdraft is a credit in the cash book, so flip every sign.

    Use it when: Overdraft BRS.

Bank Reconciliation Statement: Causes of Difference and the Method: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Cheque deposited not collected · 1 mark · MCQBoard level

A cheque deposited in the bank but not yet collected is:
(a) added to the cash book balance (b) deducted from the cash book balance to reach the pass book balance (c) ignored (d) added to the pass book balance

Try it first, then show the solutionSolution
  1. Cash book already debited; pass book balance is lower than the cash book balance, so deduct it.

Answer: (b) deducted from the cash book balance to reach the pass book balance

Example 2: List the causes · 4 marks · Short answerBoard level

State four reasons for a difference between the cash book and the pass book. (4 marks)

Try it first, then show the solutionSolution
  1. Cheques issued but not presented.
  2. Cheques deposited but not collected.
  3. Interest, charges or direct payments recorded only by the bank.
  4. Errors.

Answer: Cheques issued but not presented; cheques deposited but not collected; bank charges, interest and direct credits or debits; errors.

Example 3: BRS from the cash book balance · 6 marks · Long answerHarder board level

On 31 March the cash book showed a bank balance of Rs 40,000 (debit). Cheques issued Rs 8,000 not yet presented; cheques deposited Rs 5,000 not yet credited; bank charges Rs 300 not entered in the cash book; interest credited by the bank Rs 1,200; a customer deposited Rs 4,000 directly into the bank. Prepare the BRS. (6 marks)

Try it first, then show the solutionSolution
  1. Start 40,000.
  2. Add: 8,000 + 1,200 + 4,000 = 13,200 gives 53,200.
  3. Less: 5,000 + 300 = 5,300.
  4. 53,200 - 5,300 = Rs 47,900.

Answer:

ParticularsRs
Balance as per cash book40,000
Add: Cheques issued not presented8,000
Add: Interest credited by bank1,200
Add: Direct deposit by customer4,000
Less: Cheques deposited not credited(5,000)
Less: Bank charges(300)
Balance as per pass book47,900

Example 4: From the pass book balance · 4 marks · Short answerHarder board level

The pass book shows Rs 47,900 on 31 March. Reconcile with the cash book using the same items, starting from the pass book. (4 marks)

Try it first, then show the solutionSolution
  1. Reverse signs: items that raised the pass book are subtracted.
  2. 47,900 - 8,000 - 1,200 - 4,000 = 34,700.
  3. Add deposited not credited 5,000 and charges 300: 34,700 + 5,300 = 40,000.

Answer: Balance as per cash book Rs 40,000.

Example 5: Which items change the cash book? · 4 marks · Short answerHOTS / competency

After the BRS above, which items need correction in the cash book itself and what are the entries? Why should the business not alter the cash book for the other items? (4 marks)

Try it first, then show the solutionSolution
  1. Bank charges 300: Dr Bank charges, Cr Bank. Interest 1,200 and direct deposit 4,000: Dr Bank, Cr Interest income 1,200 and Cr Debtor 4,000.
  2. Cheques issued and deposited are already correctly in the cash book; they are only timing differences.
  3. After the three entries, the cash book becomes 40,000 + 1,200 + 4,000 - 300 = Rs 44,900.

Answer: Entries for charges, interest and direct deposit; the cheque items are timing differences that clear on their own. Adjusted cash book balance Rs 44,900.

Where students lose marks in Bank Reconciliation Statement: Causes of Difference and the Method

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

  • Mistake: Adding cheques deposited not credited

    Wrong direction.

    Wrong working

    40,000 + 5,000

    Right working

    40,000 - 5,000

    Do this: Ask: does the bank balance go up or down?

    Usually costs: 2 marks.

  • Mistake: Treating overdraft as favourable

    Missing the sign.

    Wrong working

    Add cheques issued not presented to the overdraft

    Right working

    Reverse all signs for overdraft

    Do this: Overdraft is a credit balance in the cash book.

    Usually costs: 2 marks.

  • Mistake: Mixing bank charges with cheques

    Not tracing the entry.

    Wrong working

    Add bank charges

    Right working

    Subtract bank charges

    Do this: Charges reduce the bank balance.

    Usually costs: 1-2 marks.

Exam tips

  • Always write the starting balance as "per cash book (Dr)" or "overdraft per cash book (Cr)".
  • Final figure must match the other book; show the check.
  • List items in a table of Add / Less.

Practice questions on Bank Reconciliation Statement: Causes of Difference and the Method

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 · MCQBoard level

    Bank charges debited by the bank but not recorded in the cash book are:
    (a) added in the BRS starting from the cash book (b) deducted in the BRS starting from the cash book (c) ignored (d) shown as an asset

    Hint

    Bank balance goes down.

    Answer

    (b) deducted in the BRS starting from the cash book

  2. Q2 · 3 marks · Short answerBoard level

    Distinguish between a cash book and a pass book in three points. (3 marks)

    Hint

    Who keeps it, mirror, source.

    Answer

    Cash book is kept by the business, pass book by the bank; a deposit is a debit in the cash book and a credit in the pass book; the cash book is the business's record, the pass book is the bank's statement of the account.

  3. Q3 · 6 marks · Long answerHarder board level

    Cash book balance (Dr) Rs 62,500. Cheques issued Rs 14,000 not presented; cheques deposited Rs 9,500 not collected; dividend collected by the bank Rs 2,000; insurance premium paid by the bank Rs 3,600; a cheque of Rs 1,500 deposited earlier was dishonoured, advice not received. Prepare the BRS. (6 marks)

    Hint

    Dishonoured cheque lowers the pass book.

    Answer

    62,500 + 14,000 + 2,000 = 78,500; less 9,500 + 3,600 + 1,500 = 14,600; pass book balance Rs 63,900.

  4. Q4 · 4 marks · Short answerHarder board level

    The pass book balance is Rs 25,000. Cheques issued Rs 6,000 not yet presented; cheques deposited Rs 4,500 not credited; bank charges Rs 250 and interest on deposit Rs 900, both not in the cash book. Find the cash book balance. (4 marks)

    Hint

    Start from the pass book.

    Answer

    25,000 - 6,000 + 4,500 + 250 - 900 = Rs 22,850.

  5. Q5 · 4 marks · Short answerHOTS / competency

    A business writes a cheque for Rs 12,000 and deposits a cheque for Rs 7,000 on the last day of the month, neither cleared. The cash book balance is Rs 30,000 (Dr). Show two ways of reconciling: first from the cash book to the pass book, then back from the pass book to the cash book. Also say why the two items need no correction in the cash book. (4 marks)

    Hint

    Way 1: 30,000 + 12,000 - 7,000. Way 2: reverse the signs starting from the pass book figure.

    Answer

    Way 1 (from the cash book): pass book balance = 30,000 + 12,000 - 7,000 = Rs 35,000. Way 2 (reverse, from the pass book): cash book balance = 35,000 - 12,000 + 7,000 = Rs 30,000. The cash book is correct; the bank will clear both cheques soon, so the difference is only timing and no cash book correction is needed.

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.Is the BRS an account?Show answer

    No, a statement.

  2. 2.Cheque issued not presented, from cash book?Show answer

    Add.

  3. 3.Bank charges, from cash book?Show answer

    Deduct.

  4. 4.Cash book Dr equals pass book?Show answer

    Credit.

  5. 5.Overdraft BRS signs?Show answer

    Reversed.

Bank Reconciliation Statement: Causes of Difference and the Method: frequently asked questions

Does the BRS change the cash book?

No, only the entries for bank-only items are made.

Who prepares it?

The business, usually monthly.

Is dishonoured cheque a timing difference?

No, it needs a cash book entry.

Why prepare it?

To find errors and the true bank position.