BRS Full Form

What is the full form of BRS ?

BRS stands for Bank Reconciliation Statement. A bank reconciliation statement is prepared by the accountant of any business. It is usually prepared for comparing the bank record with the company record of any business. This process is done every month. This statement is also prepared for comparing or to know the reason for differences in passbook and cashbook. To know more about BRS and its preparation continue reading this article.

This Story also Contains

1. What is the full form of BRS ?
2. What is BRS?
3. Needs for BRS preparation
4. Different methods to prepare BRS
5. Information required for BRS preparation
6. Important steps of BRS preparation
7. Some examples of BRS

What is BRS?

A bank reconciliation statement is defined as the process of maintaining business records, and transactions. It is also defined as a statement that is prepared to reconcile the difference between bank balance in the cash book and pass book.

Needs for BRS preparation

There are many reasons why BRS preparation is needed. Some of the important reasons are mentioned below:

• It helps the customer to know their current bank balance.

• It also helps in denoting whether there is any uncalled delay during the process of cheque clearance.

• It also helps to determine if there is any fraudulent action or problem-related to the bank.

• It does not allow bank staff to steal customers.

• It also helps customers to understand the differences in the amount in the cash book and passbook.

• It is also reflected in the passbook that if there is any income transacted by the bank.

Different methods to prepare BRS

In the previous paragraph, we understood the need for BRS preparation. Now we will learn different methods of BRS preparation. Generally, there are two methods of BRS preparation:

• Addition and subtraction rules

• Debit and credit method

Information required for BRS preparation

The formation of a bank reconciliation statement uses both statements of the current and previous month, along with the closing bank balance of that account. The account prepares a reconciliation statement using all the transactions done throughout the previous day.

Important steps of BRS preparation

The important steps of BRS preparation are explained below:

• Initial check - first check and compare all the records in the bank statement and ledger cash account. Check all records in the ledger and clear the bank account statement

• Deposit check - Check all the deposits in your account

• Interest earned - for interest-bearing accounts, add total interest earned at appropriate rates

• Bank errors - there may be errors by the bank as bank workers are also human like us and they might mistakenly interchange the entries.

• Outstanding checks - outstanding checks should be deducted overall bank balance

• Check ledger error - bank service charge should be deducted from the ledger, as a bank charge for facilities which it provides

• Check reconciliation - register may contain posting a payment that did not reach completion. Check this before adding it to the bank statement.

• Equate final balance - the overall balance must match to finalize the reconciliation

• Journal entries - We may sometimes require journal entries to correct the errors.

Some examples of BRS

Prepare a Bank Reconciliation Statement of Sarita Enterprises.

• Bank overdraft according to the passbook as of 12th April was 40,000.

• Cheques were deposited in the bank for the amount of 20,000 and the complete amount was cleared by 12th April

• During April, cheques of Rs. 10,000 were issued and 5,000 remained with the supplier.

• Bank collected 15,000 but wrongly entered it as 17,000 in the cash book.