Advantages of Bank Reconciliation Statement (BRS)

What is a Bank Reconciliation Statement?

BRS simply refers to Bank Reconciliation Statement. It is a report or statement prepared by the business to match the bank transactions recorded in the books of accounts with the bank statement.

It  helps to check the correctness of the entries recorded in the books of accounts and thereby, ensures the accuracy of bank balances.

In addition to this, reconciling bank statements with the cash book balances helps a business entity to ascertain the causes of differences. Hence, necessary accounting changes can be made in the entity’s books to ensure accuracy.

Bank reconciliation statement (BRS) involves the process of identifying the transactions individually and matching  it with the bank statement such that the closing balance of bank in books matches with the bank statement. For one which is not matched, suitable adjustments or correction will be done in the book to match it.


Some of the notable benefits or advantages of bank reconciliation statement can be highlighted as follows:

  1. No matter how reliable the systems are, human errors in the system are always possible. Hence, bank reconciliation helps in rectifying the mistakes by pointing them out after reconciliation.
  2. It provides up-to-date records and information regarding collections and payments which helps to maintain proper accounting system in the organization.
  3. The continuous comparison of Cash Book with the Pass Book keeps check on employees trying to indulge in embezzlement and misappropriation of funds .
  4. The information regarding transaction of interest and other expenses (e.g., commission) which are recorded by Bank, but not recorded by customer in his Cash Book is received by preparation of Bank Reconciliation Statement.
  5. It helps to know the transaction status i.e. collection and clearance of checks. It provides information about cashed or uncashed of checks.

Thus, in simple words , BRS is a statement showing the items of differences between the cash book balance and the pass book balance, prepared on any day for reconciling the two balances.


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