Accounting explained
Bank Reconciliation: Meaning, Format and Example
Your bank balance in the books and the balance on the bank statement are rarely the same on the same day. A bank reconciliation statement (BRS) lists the reasons, item by item, until the two agree. Anything left unexplained is an error or something worse.
Why the two balances differ
| Reason | In your books? | On the statement? |
|---|---|---|
| Cheque issued to a supplier, not yet presented | Yes (bank reduced) | Not yet |
| Cheque deposited, not yet cleared | Yes (bank increased) | Not yet |
| Bank charges, SMS charges, GST on charges | Not yet | Yes |
| Interest credited by the bank | Not yet | Yes |
| UPI or card settlements credited in a lump | As individual sales | As one credit, sometimes a day later |
| Customer paid directly by NEFT without telling you | Not yet | Yes |
| Errors on either side | Maybe | Maybe |
Worked example: Sri Lakshmi Stores, 31 March 2026
The store's bank book shows ₹1,60,354 on 31 March 2026. The bank statement shows ₹1,70,000. Comparing them line by line, Ramesh finds three differences: the bank charged ₹300 of fees plus ₹54 GST (₹354) that are not in the books; a cheque for ₹22,000 given to Kaveri Oils on 30 March has not been presented; and a ₹12,000 cheque from Annapoorna Mess, deposited on 31 March, has not been credited yet.
First he records the ₹354 charges in the books, which brings the bank book to ₹1,60,000, the figure in the year-end balance sheet. Then he reconciles:
| ₹ | |
|---|---|
| Balance as per bank book (after recording charges) | 1,60,000 |
| Add: cheque issued to Kaveri Oils, not yet presented | 22,000 |
| Less: cheque from Annapoorna Mess deposited, not yet credited | (12,000) |
| Balance as per bank statement | 1,70,000 |
How often to reconcile
Monthly at the least, and weekly for a shop that takes most of its money by UPI and cards. The longer you wait, the harder it is to remember what a ₹3,250 credit from "UPI/XYZ" was for. Reconciling before filing GST returns also catches sales recorded in the bank but missed in the books.
Common mistakes
- Adjusting the books to the statement balance without finding the reasons
- Leaving bank charges and interest unrecorded for months
- Treating an uncleared cheque as received in the P&L when it later bounces
- Not following up cheques issued but never presented
- Recording UPI settlements as new sales when the sales were already billed
UPI and card settlements
A shop that takes most payments by UPI and card faces a different problem from cheques: hundreds of small credits, or one consolidated settlement a day from a payment provider, net of fees. Match settlements against the day's digital sales total rather than bill by bill, and record the provider's fees and the GST on them as expenses. If a day's settlement is short, check for refunds, chargebacks and failed transactions before assuming an error.
Key terms on this page
- Unpresented cheque: a cheque you issued that the payee has not yet banked
- Uncleared deposit: a cheque you deposited that the bank has not yet credited
- Bank book: your own record of the bank account, the bank column of the cash book
About the worked example
The examples on our accounting pages follow one shop through one year: Sri Lakshmi Stores, a kirana in Mysuru owned by Ramesh, for the financial year 2025-26. It sold ₹48 lakh of goods (before GST), made a gross profit of ₹10.4 lakh and a net profit of ₹4.7 lakh, and ended the year with a balance sheet total of ₹7.95 lakh. The figures are illustrative but they add up across every page, so you can follow one transaction from the journal to the balance sheet.
How TripleBill handles it
In TripleBill, Cash & Bank → Reconcile lets you import the bank statement (CSV) and tick entries that match your books; unreconciled items stay listed until they clear (Starter and Pro). Each POS or UPI bill carries a unique reference, which makes matching easier.
General information on bookkeeping, not accounting or tax advice. For your final accounts and filings, consult a chartered accountant.
Last reviewed
Last reviewed: November 2026.
How to prepare a bank reconciliation
- 1
Get both balances
Take the bank book balance from your books and the closing balance from the bank statement for the same date.
- 2
Tick matching items
Match each deposit and payment in the books with the statement and tick both; whatever is left unticked is a difference.
- 3
Update the books
Record items that are only on the statement, such as bank charges, interest and direct receipts, with proper entries.
- 4
List timing differences
Add unpresented cheques and subtract uncleared deposits from the book balance until it equals the statement balance; investigate anything left over.
Frequently asked questions
What is a bank reconciliation statement?
A statement that explains, item by item, the difference between the bank balance in your books and the balance on the bank statement on the same date.
Why does my bank balance not match my books?
Usually timing: cheques not yet presented or cleared, charges and interest not yet recorded, or settlements credited later. Sometimes an error.
Should I change my books to match the bank?
Only for genuine items you have not recorded, such as bank charges. Timing differences stay as they are and clear next month.
How often should I reconcile?
At least monthly; weekly if most of your sales are digital.
Is GST charged on bank charges?
Yes, banks charge GST on fees. If the charge is for business, the GST can usually be claimed as input credit when it appears in GSTR-2B.
What if a deposited cheque bounces?
Reverse the receipt: debit the customer and credit the bank, and record any bounce charges.
Related
Your first invoice is two minutes away.
7-day free trial with everything unlocked. No card needed.