Bank Recociliation

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Querist : Anonymous

Querist : Anonymous (Querist)

14 December 2009 Hello, Please advice what are the basic requirments in bank reconciliation. and provide meaning and over draft. and please advice me bank interest formola.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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14 December 2009 In cash book we make entries whenever cheques are deposited or issued. The effect of these transactions are reflected in the bank only when these are cleared.

For cash transactions no such problems are there except bank makes mistake in crediting another one's account.

At the end of every month; we match the balances of cash book with bank statement.

If these transactions are cleared in next month (generally within 4-5 days); then it is said that whatever differences were noticed while making Bank Reconciliation Statement; have now been reconciled.

Bank overdraft is excess withdrawn from Bank than the deposit made. Now-a-days; banks are not permitting such clean overdraft.

Practically now-a-days excess withdrawals happens when banks have given cash credit type limits to the borrower.

Bank interest is calculated on product basis by the banks. Every day product is calculated by multiplying balance with number of days funds utilized. The total of products is divided by 365 and then rate of interest is applied thereon.

Murtaza I Bhagat

Murtaza I Bhagat (Expert)
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15 December 2009 1. Bank Reconciled means ,Your Bank book Balance & Bank Statement balance at the End of the Month/Year,It Should be Same. If No then Found the difference between Bank Book & Bank Statement is Called Bank Reconsilation.
2. as per Surendra sir said Transation of Bank which occured from us but bank done the entry (debit/Credit) when they Received the Instrument.if you do that in last week of any month/year. it suppose to be clear in next month/year.So your Bank Book and Bank Statement had difference. thats why Bank Reconsilaiton in Useful & important.
3. Bank OD & Bank CC Facilities are useful when you given Payment to party excess than what you have in your bank a/c.
4. Bank Interest its upon your Utilization & Repayment Method & Days how much you have taken to Repay and rate also.
OD/CC Amount X R.O.I/100 X No.days/365

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