Bank Reconciliation Statement Class 11 Notes

These are revision notes for Bank Reconciliation Statement, Chapter 5 of NCERT Class 11 Accountancy. The page covers the causes of difference between the cash book and the passbook, the BRS format, a balancing rule that works for all four situations, five worked examples with original amounts, and the mistakes students most often repeat.

These notes follow the NCERT Accountancy textbook for the 2026-27 session. Use them as your quick revision layer, then practise from the textbook exercises.

This page sits in the Class 11 Accountancy notes collection; you can also jump to the Class 11 notes hub or the CBSE notes library. If the bank column entries feel shaky, revise Recording of Transactions II first.

Reference: NCERT Class 11 Accountancy textbook, chapter Bank Reconciliation Statement.

Bank Reconciliation Statement Chapter at a Glance

A bank reconciliation statement is a statement prepared to reconcile the bank balance as per the cash book with the balance as per the passbook or bank statement, by showing the items of difference between the two (NCERT, p. 174). It exists because, in practice, the two balances rarely match (NCERT, p. 161).

• Need for reconciliation: the firm records bank transactions in a cash book, while the bank records the same account in its own books; a BRS explains and removes the gap (NCERT, pp. 160-161).
• Two families of causes: timing differences in recording, and errors made by the business or by the bank (NCERT, p. 163).
• Two preparation routes: preparing the BRS without adjusting the cash book balance, and preparing it after adjusting the cash book balance (NCERT, p. 166).
• Four starting situations: favourable balance per cash book, favourable balance per passbook, overdraft per cash book, or overdraft per passbook (NCERT, p. 167).
• Chapter summary: the chapter’s own summary and key terms appear on p. 174.

Cash Book vs Passbook: Favourable and Unfavourable Balances

Start with the mirror-image idea: the same bank account is written from two sides. The firm’s cash book treats deposits as debits; the bank’s passbook treats deposits as credits (NCERT, p. 160). So the same balance has opposite names in the two books.

A favourable balance exists when deposits exceed withdrawals, meaning the firm has money in the bank. An unfavourable balance or overdraft exists when withdrawals exceed deposits, meaning the firm has effectively borrowed from the bank (NCERT, p. 166). Neither balance is wrong; they are the same account described from two sides.

Why Cash Book and Passbook Balances Differ: Timing and Errors

The chapter classifies every difference into timing differences and errors (NCERT, p. 163). The table gives the standard cause, its effect, and its treatment when the cash book is the starting point.

Outstation cheques are a common real-world cause of a clearing delay: the bank credits the account only when the amount is actually realised, which may take days (NCERT, p. 163). Timing causes have a fixed treatment; errors must be reasoned about case by case.

Key Terms and Definitions in This Chapter

The chapter lists Bank Reconciliation Statement and Cash book and Passbook as its key terms (NCERT, p. 174). The working vocabulary you need is in this table.

The BRS Balancing Rule: One Equation for All Four Situations

NCERT does not give a named formula, but every solved illustration uses the same arithmetic. Use a signed balance convention: treat a favourable balance as positive and an overdraft as negative. Then the rule is:

\(PB = CB + A – D\) where PB is the balance as per passbook, CB is the balance as per cash book, A is the total of items that make the passbook balance higher, and D is the total of items that make it lower. If the question gives the passbook balance, rearrange it:

\(CB = PB – A + D\) The units are rupees throughout, and a negative final figure means an overdraft. Errors are adjusted according to rectification principles, either in the cash book or directly in the BRS.

Bank Reconciliation Statement Format and How to Prepare It

The chapter recommends the two-column table form, one column for additions and one for deductions (NCERT, p. 161). The same proforma works whether the starting balance is favourable or an overdraft.

Follow this routine to start any BRS question correctly.

1. Write a heading that names the business and the date.
2. Choose the starting balance: as per cash book or as per passbook.
3. Compare the two records and list every item of difference.
4. Classify each item as a plus or a minus from the chosen starting point.
5. Total both columns.
6. The balancing figure is the other balance.

Critical note: if the passbook balance is the starting point, every treatment is reversed (NCERT, p. 167). The format itself does not change for an overdraft; the overdraft simply starts in the minus column.

Worked Examples: All Four BRS Situations (with Original Amounts)

These five examples use new amounts. Every table balances, and every final balance is labelled favourable or overdraft.

Example 1: Favourable cash book balance to passbook (Rohan Mehta)

Method: start from the favourable cash book balance, add items that make the passbook higher, deduct items that make it lower, and the balancing figure is the passbook balance.

Rohan Mehta prepares a BRS as on June 30, 2025. His cash book shows a debit (favourable) balance of Rs 1,20,000. Cheques issued but not presented are Rs 18,500; cheques deposited but not yet credited are Rs 12,900; the bank collected a dividend of Rs 9,400; bank charges of Rs 1,200 are not in the cash book; and a customer deposited Rs 7,500 directly into the bank.

Final answer: balance as per passbook is a favourable balance of Rs 1,41,300.

Example 2: Favourable passbook balance to cash book (Gupta and Sons)

Method: start from the passbook and reverse every treatment: items that make the passbook larger become deductions, and items that make it smaller become additions.

Gupta and Sons prepare a BRS as on May 31, 2025. The passbook shows a favourable credit balance of Rs 75,000. Cheques issued but not presented are Rs 12,000; cheques deposited but not credited are Rs 9,500; bank charges debited are Rs 300; and interest of Rs 2,000 was credited by the bank.

Final answer: balance as per cash book is a favourable balance of Rs 70,800.

Example 3: Overdraft per cash book to passbook (Nisha Traders)

Method: an overdraft is a negative figure, so it starts in the minus column. The final negative balance becomes the balancing figure on the plus side.

Nisha Traders prepares a BRS as on December 31, 2025. The cash book shows an overdraft of Rs 60,000. Cheques issued but not presented are Rs 15,000; cheques deposited but not credited are Rs 11,000; interest charged on the overdraft is Rs 2,500; and the bank collected and credited a bill of Rs 8,000.

Final answer: overdraft as per passbook is Rs 50,500.

Example 4: Overdraft per passbook to cash book (Arjun Shah)

Method: start from the passbook overdraft and reverse the cash book treatment of every item.

Arjun Shah prepares a BRS as on September 30, 2025. The passbook shows an overdraft of Rs 45,000. Cheques issued but not presented are Rs 9,000; cheques deposited but not credited are Rs 6,500; a customer deposited Rs 12,400 directly into the bank; and the bank paid an insurance premium of Rs 3,200 on a standing instruction.

Final answer: overdraft as per cash book is Rs 56,700.

Example 5: Amended cash book method (Khanna and Co.)

Method: first adjust the cash book for items the firm had no entry for, then prepare the BRS from the amended balance, handling only the remaining timing items.

Khanna and Co. prepare a BRS as on March 31, 2025. The cash book shows an overdraft of Rs 28,400. Bank charges of Rs 900 and interest on overdraft of Rs 1,600 have not been entered in the cash book. A bill receivable of Rs 7,500 and a customer’s direct deposit of Rs 5,000 were collected by the bank.

Cheques issued but not presented are Rs 6,200, and cheques deposited but not credited are Rs 4,100.

Step 1: amended cash book — adjust only the items the cash book has missed. Cheques issued and deposited are timing items already recorded in the cash book, so they enter the BRS in Step 2.

Step 2: BRS from the amended balance.

Final answers: amended overdraft as per cash book is Rs 18,400; overdraft as per passbook is Rs 16,300.

Common Mistakes in BRS Questions (and How to Fix Them)

These are the traps the chapter’s True/False check on p. 173 trains you against.

When the two columns do not total, the error is almost always a classification mistake, not an arithmetic one.

Why Businesses Do This Every Month: BRS in Practice

After balancing the cash book, the cashier checks its details against the firm’s bank records. That is why the cash book must be completely up to date and a recent bank statement or passbook must be obtained (NCERT, p. 160).

A monthly reconciliation surfaces missing entries (bank charges, standing-instruction payments, direct deposits, bank errors) and timing causes such as outstation cheque delays. It also updates the cash book before the next statement, so the firm sees its real bank position and avoids an overdraft surprise.

Exam Notes: How to Present a Complete BRS Answer

A complete BRS answer is a routine, not a trick. Follow this checklist.

1. Write a heading with the business name and the date.
2. Start with exactly one balance: as per cash book or as per passbook.
3. Classify every item from that starting point before writing it down.
4. Keep two amount columns and make their totals equal.
5. Label the final balance as favourable or overdraft.
6. If the starting point is the passbook, reverse every add and deduct treatment (NCERT, p. 167).
7. If the question asks for the amended cash balance, show the amended cash book first, then prepare the BRS from that adjusted balance (NCERT, p. 166).

The chapter’s own exercise section groups questions as favourable cash book, favourable passbook, unfavourable cash book and unfavourable passbook (NCERT, pp. 174-178), so identifying which balance is given tells you which situation you are practising. Error adjustments follow the principles you will revise in Trial Balance and Rectification of Errors.

For page-by-page verification, the official chapter PDF is available on ncert.nic.in.

One-Page Revision Summary for Bank Reconciliation Statement

All four situations fit one table.

Memory device: starting from the cash book, ADD the three CIDs — Cheques issued (but not presented), Interest credited by the bank, and Direct deposits by customers — and DEDUCT the four Ds — Deposited but not collected, Direct debits, Direct payments on standing instructions, and Dishonoured cheques and bills.

If the two columns do not total, recheck the classification before touching the balance.

Frequently Asked Questions about Bank Reconciliation Statement

Why does the cash book show a debit balance when the passbook shows a credit balance for the same bank balance?

Because the same account is recorded from opposite sides. The firm’s cash book treats deposits as debits, while the bank’s passbook treats deposits as credits. A favourable balance is therefore a debit balance in the cash book and a credit balance in the passbook (NCERT, p. 160).

If the passbook balance is the starting point, do I reverse the add and deduct treatment?

Yes. When the passbook balance is the starting point, every treatment is reversed. For example, cheques issued but not presented are added from a cash book start but deducted from a passbook start (NCERT, p. 167).

When the question says ‘overdraft as per cash book’, why does it go in the minus column?

Because an overdraft is a negative balance. Placing it in the minus column shows it reducing the total, and the final overdraft then appears as the balancing figure on the plus side (NCERT, p. 169).

What does ‘wrongly debited by the bank’ mean in a BRS question?

It means the bank has made an error and reduced the firm’s account by a debit that was not justified. From a cash book start you deduct it; from a passbook start you add it back (NCERT, p. 171).

What is the amended cash book method of preparing a bank reconciliation statement?

In this method, you first update the cash book for items the firm did not know about, such as bank charges, interest, and direct deposits or collections. The amended cash book balance is then used as the starting point of the BRS, which handles the remaining timing items (NCERT, p. 166).

Which balance is correct: the cash book balance or the passbook balance?

Before reconciliation, a difference may be due to timing or to an error by the business or the bank. The BRS explains the timing and error differences so that the two balances agree (NCERT, pp. 161, 174).

Reference: NCERT Class 11 Accountancy textbook, chapter Bank Reconciliation Statement.

Official source: download the NCERT textbook free from ncert.nic.in.