Tuesday 27 October 2015

Errors in bank statement


Errors or omissions by the bank can lead to a difference between the balance as per bank statement and the balance as per cash book. For instance, bank may incorrectly record the deposits or withdrawals of another account into the company's bank account. Likewise, a deposit or withdrawal be erroneously recorded twice by the bank. Such discrepancies would cause the balance shown in the bank statement to be higher or lower than cash book balance depending on the nature of the error or the omission. The differences must be intimated to the bank for timely correction.

Example

ABC & Co.'s bank statement for the month of December 2010 shows that bank charges of $500 have been incorrectly been recorded twice by the bank. As the balance as per bank statement would be lower than the balance as per ABC & Co.'s cash book due to the error, $500 must be subtracted from the balance as per cash book in the bank reconciliation statement.

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