Bank Reconciliation Meaning

It means matching transactions in Bank Statement with Balance of Bank Account as per Tally and Reporting differences if any


Why is BRS needed

In Companies, normally there is daily accounting of cheque given to someone or cheque received from someone.

However, it may happen that it may take some days to clear in Bank Account.

Hence Balance as per Tally may not match with Balance as per Bank Statement

Hence, Bank Reconciliation is prepared weekly or monthly to match Balances of Tally or Bank Statement and find out the differences if any.


Procedure for BRS

  1. Download Bank Statement for a week or month.
  2. Find Balance of Bank Account in our Books
  3. Find Differences if any between the two

These Differences are of 2 types

  • Entries in Bank Statement not in Tally
  • Entries in Tally not in Bank Statement


Entries in Bank Statement not in Tally

Examples of such entries are

  • Bank Charges
  • Interest Income
  • Direct Deposit by Customer in Bank Account etc

These entries should be actually passed in Tally else Profit and loss and Balance Sheet will be incorrect

(For example-If bank charges are not shown in expense side of P&L,then P&L would be inaccurate)



Entries in Tally not in Bank Statement

Examples of such entries are

  • Cheque Issued to Creditor, not yet Presented by him
  • Cheque received from Customer, not yet cleared in Bank

These are shown pending in Bank Reconciliation

(In Tally, we open Bank Account and do F5 Reconcile. It asks for Bank Date(We put dates as per Bank Statement) For those which are not appearing in Bank Statement, we leave blank

On Enter Enter or Ctrl A,it shows Bank Reconciliation)

We can take printout or Export in Excel



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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.