Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
After preparing a BRS, the accountant is unsure which reconciling items should be posted in the books and which should be left alone.
Post entries for items the bank has recorded but the books have not, and for errors in your own books; leave timing items and bank errors in the BRS only.
Entry items: bank charges, interest credited, direct credits, direct debits and EMIs, dishonoured cheques, own errors. No-entry items: cheques not presented, deposits not credited, bank errors.
An adjusted cash book balance equal to the adjusted passbook balance, with only timing items left on next month's BRS.
Items the bank has recorded and your books have not (bank charges, interest, direct credits and debits, dishonoured cheques) need a journal entry, and so do mistakes in your own entries. Timing items, such as cheques not yet presented and deposits not yet credited, need no entry. Neither do bank errors: the bank corrects those.
Which items need an entry, and what is it?
Here are the common items with the entry you pass in your books. In Tally these are usually payment, receipt or journal vouchers against the bank ledger; in Zoho Books you can record them from the bank feed or as manual journals.
| Item found in BRS | Entry in your books | Why |
|---|---|---|
| Bank charges ₹590 (₹500 + 18 percent GST of ₹90) | Dr Bank charges ₹500, Dr Input CGST ₹45, Dr Input SGST ₹45, Cr Bank ₹590 | The bank has taken the money; your books do not know |
| Interest credited ₹1,250 | Dr Bank ₹1,250, Cr Interest income ₹1,250 | Income earned, not yet booked |
| NEFT receipt from a customer ₹24,000 | Dr Bank ₹24,000, Cr Customer ₹24,000 | Customer paid directly; clears their dues |
| Loan EMI ₹12,400 debited | Dr Loan (principal) and Dr Interest on loan (split as per schedule), Cr Bank ₹12,400 | Repayment made by standing instruction |
| Customer cheque dishonoured | Dr Customer, Cr Bank (plus any return charge to Bank charges) | The receipt you recorded did not happen |
| Your own error (for example ₹4,500 entered as ₹5,400) | Reverse or correct the difference of ₹900 | Your books are wrong |
The GST line applies only if you are registered and the bank’s invoice qualifies for input tax credit. If it does not, the full ₹590 goes to bank charges.
What is an adjusted cash book, and why prepare it before the BRS?
An adjusted cash book is your cash book after you post every bank-only item. Preparing it first leaves only timing items in the BRS, which makes the statement short and easy to review.
Worked example. On 31 March the cash book shows ₹4,72,500. The BRS found these bank-only items: NEFT receipt ₹24,000, interest ₹1,250, bank charges ₹590 and loan EMI ₹12,400.
- Cash book balance: ₹4,72,500
- Add NEFT receipt: ₹4,72,500 + ₹24,000 = ₹4,96,500
- Add interest: ₹4,96,500 + ₹1,250 = ₹4,97,750
- Less bank charges: ₹4,97,750 − ₹590 = ₹4,97,160
- Less EMI: ₹4,97,160 − ₹12,400 = ₹4,84,760
Adjusted cash book balance: ₹4,84,760. That is the figure in the balance sheet.
The passbook shows ₹4,91,060. The two timing items are a cheque issued but not presented (₹18,000) and a deposit not yet credited (₹11,700). Adjusted passbook: ₹4,91,060 − ₹18,000 + ₹11,700 = ₹4,84,760. Both sides agree.
Why does a cheque not yet presented need no entry?
Because your books are already right. You issued an ₹18,000 cheque and recorded the payment. The only thing missing is the bank’s side, and that will arrive when the payee banks the cheque.
So the ₹18,000 stays in the March BRS. In April, the bank pays it, the debit appears on the statement, you tick it against the March entry, and it leaves the BRS. No journal at any point. If you passed an entry for it, you would count the payment twice.
The same logic applies to a deposit not yet credited. It needs an entry only if it later turns out to be a problem, such as a bounced cheque or a cheque that goes stale.
How do you stop these entries piling up?
Do them every month, not at year-end. Bank charges in particular arrive as many small debits with GST, and a year’s worth posted in March is hard to match to the bank’s GST invoices. A short monthly routine (download the statement, tick, post bank-only items, prepare the BRS) keeps the list small.
What to read next
- Next in this series: Is my bank reconciliation correct? Five checks before you sign it off
- Go deeper: Bank charges reconciliation in India
- Go deeper: Reconciliation playbook: monthly close in India
- For teams: Bank reconciliation software for India
TransactIG matches bank statement lines to the books and lists bank-only items in an exception queue, so you can see what needs an entry before you close the month.