Rules:
1. In the Books of Trader (Cash Book/Bank Column)
Increase in Bank Balance = Debit (Receipt Side)
Decrease in Bank Balance = Credit (Payment Side)
2. In the Books of Bank (Pass Book/Bank Statement)
Increase in Bank Balance = Credit
Decrease Bank Balance = Debit
Theoretically speaking there should not be any disagreement between Cash Book (Bank Balance) and Pass Book Balance (Bank Statement), as all banking transactions are recorded in both the books.
But generally it is found that bank balance as per Cash Book does not tally with bank balance as per Pass Book or Bank Statement. Hence, to reconcile the above balances and explain the reasoning for the difference between them 'Bank Reconciliation Statement' is prepared.
Bank Pass Book (Bank Statement)
Bank Pass Book (also known as Bank Statement) is a copy of Customer's A/c maintained by the Bank in his main ledger. Since Bank is the trustee of the customers, the bank provides to its customer a Bank Statement at regular intervals (generally during the 1st week of each month), which summarises payments as well as deposits and other charges for the period.
Date of Preparation of Bank Reconciliation Statement
Normally Bank Reconciliation Statement is prepared by the trader on closing date of accounts, i.e., Dec. 31 or June 30 or March 31. Sometimes it is prepared at the end of every month after preparing Cash Book or regularly after certain interval to check the accuracy of Cash Book. statutory there is no specific date to prepare it.