Difference between Bank Statement and Bank Reconciliation Statement

A Bank Statement and a Bank Reconciliation Statement are often considered as same. But there are differences between them. A Bank Pass Book is the true copy of the account of the customer in the books of the bank, whereas a Bank Reconciliation Statement is a statement prepared mainly to reconcile the differences between the ‘Bank Balance’ shown by the Cash Book and Bank Pass Book. 

What is a Bank Statement or Bank Pass Book?

A copy of the account, of the account holder in the books of the bank, is known as Bank Statement or Bank Pass Book. It is issued by the bank to the account holder so that entries in the Bank Reconciliation Statement or Bank Pass Book can be compared with the entries in the Cash Book and the difference is determined.

A debit balance in the Bank Statement or Bank Pass Book means an amount payable by the account holder to the bank, whereas a credit balance means an amount payable by the account holder, i.e., an amount receivable by the account holder from the bank.

What is a Bank Reconciliation Statement?

A statement prepared by the account holder on a particular date (any date of the year) to reconcile the Bank Balance as per the Cash Book(record of the account holder) with the balance as per Bank Statement or Bank Pass Book (record of the bank) showing entries that are reasons for the difference between the two balances is known as Bank Reconciliation Statement.

According to Patil, “Bank Reconciliation Statement is a statement prepared mainly to reconcile the difference between the ‘Bank Balance’ shown by the Cash Book and Bank Pass Book.”

Preparing a Bank Reconciliation Statement is important because of the following reason:

1. The errors or omissions that may have been committed either on the part of the customer or the bank can be located and errors so detected can be rectified with the help of a Bank Reconciliation Statement.
2. The customer becomes sure of the correctness of the bank balance shown by the cash book by preparing a Bank Reconciliation Statement, which helps in making further transactions with the bank.
3. A revised Cash Book can be easily made with the help of a Bank Reconciliation Statement.
4. The chances of embezzlement by the staff are reduced as there is periodic preparation of Bank Reconciliation Statement.
5. Unnecessary delay in the collection of cheques by the bank is revealed with the help of Bank Reconciliation Statement.
6. It keeps a track of cheques that have been sent to the bank for collection.

Difference between Bank Statement and Bank Reconciliation Statement

Basis	Bank Statement/Pass Book	Bank Reconciliation Statement
Preparation	It is prepared by banks.	It is prepared by businessmen.
Objective	Its main objective is to inform customers about the transactions during a period.	Its main objective is to find out the cause or causes of difference in the balance sheet of cash book and pass book and rectify them.
Time	It is prepared for a particular period.	It is prepared on a particular date.
Necessity	It is necessary to prepare Bank Statement/ Pass book.	It is not necessary for businessmen/customers to prepare Bank Reconciliation Statement.
Content	The content includes: (i) Date of Transaction (ii) Particulars of Transaction (iii) Drawings (iv) Deposits (v) Balance	The content includes: (i) Cause or Causes of differences (ii) Amount of difference
Starting Amount	It begins with the balance of the customer’s balance account.	It begins with the Cash Book or Pass Book balance.
Final Result	The balance in the account of the customer in the books of the bank after a particular period is shown as the final result.	The balance of Cash Book or Pass Book on a particular date is shown as the final result.