Bank reconciliation statement

India
September 26, 2006 5:16am CST
pls explain me what is bank reconciliation statement.when cheque is issued to third party,pass book shows higher balance than cash book in bank.how?
1 response
@SunnyDays (1070)
• Bahamas
6 Oct 06
It's because the check is not yet cashed by the third party and doesn't show in your bank account until the next month. So your cash book knows that the money is going out thats why the balance is lower . Thats why you should reconcile your bank account : add all outstanding checks or credits for the month on your bank statement and if you do that you should come up with the same amount as in your cash book