Accounting · Bank Reconciliation Statement

Preparing BRS Starting from Cash Book Balance

Updated 1 October 2026 · Fact-checked

A bank reconciliation statement (BRS) starting from the cash book balance adjusts that balance for items the bank has recorded but the cash book has not, or the reverse, until it matches the pass book balance. Sort each item, apply the add or deduct rule, and check the result.

Understand Preparing BRS Starting from Cash Book Balance

Your cash book (bank column) and the bank's pass book record the same account from two sides. Their balances often differ for a while. A bank reconciliation statement explains the difference. It is not a ledger account. It is a statement made on a given date.

When you start from the cash book balance, your aim is to reach the pass book balance. You do this by asking one question for each item: what must I do to the cash book balance so that it looks like the bank's figure?

The key is to think about the bank's view. If your cash book has counted a receipt that the bank has not yet credited (a cheque deposited but not collected), the pass book is lower, so you deduct it. If your cash book has already reduced its balance for a payment that the bank has not yet made (a cheque issued but not presented), the pass book is higher, so you add it. In the same way, if the bank has credited you for something your cash book has not recorded, add it. If the bank has debited you for something your cash book has not recorded, deduct it.

The starting balance also matters. A favourable balance (debit balance, money in bank) in the cash book is the normal case. An overdraft (credit balance in the cash book) reverses every add and deduct rule. Always read the first line of the question carefully.

Items the bank has recorded but your cash book has not, such as direct credits, direct debits, bank charges and interest, are also included in the BRS as reconciling items when you start from the cash book balance. Apply the same add or deduct rule to each.

Key rules to remember

Start: favourable cash book balance: Add: cheques issued but not yet presented; cheques/amounts credited by bank but not in cash book. Less: cheques deposited but not yet collected; amounts debited by bank but not in cash book.; Result is the pass book balance (favourable).
Start: overdraft per cash book: Reverse every rule: Less: cheques issued not presented; amounts credited by bank not in cash book. Add: cheques deposited not yet collected; amounts debited by bank not in cash book.; Result is the pass book overdraft.
Cheques issued but not presented: Favourable balance: Add. Overdraft: Deduct.; Bank has not yet paid, so the pass book is higher than the cash book.
Cheques deposited but not yet collected: Favourable balance: Deduct. Overdraft: Add.; Cash book counted the receipt, but the bank has not credited it yet.
Direct credit by bank (interest, dividend, direct deposit): Favourable balance: Add. Overdraft: Deduct.; Bank has increased your balance but your cash book has not.
Direct debit by bank (charges, standing instruction, dishonoured cheque): Favourable balance: Deduct. Overdraft: Add.; Bank has reduced your balance but your cash book has not.

How to solve Preparing BRS Starting from Cash Book Balance questions

Use this order for any question where you are told to start with the cash book balance.

1Read the question and note the date, the cash book balance and whether it is favourable (debit) or overdraft (credit).
2Write the heading: Bank Reconciliation Statement as on [date]. Start the first line: Balance as per Cash Book (Dr) or (Cr / overdraft).
3List every item given and tick it off as you use it. Note any error in the cash book as well.
4Decide for each item whether the cash book or the bank has the entry. Items already in the cash book but not yet in the pass book are timing items. Items in the pass book but not in the cash book need no further cash book entry in this method; just adjust the statement.
5Apply the add or deduct rule based on the starting balance (favourable or overdraft). Write the item with a brief label.
6Total the additions and deductions. Compute the final line: Balance as per Pass Book.
7Check your answer against the pass book balance if given. If it does not match, re-check the sign of each item and any cash book error.
8Mention the nature of the balance (favourable or overdraft) at the end.

Quickest way: Direction test for each item

When to use it: Use this when the question has many items and you are short of time.

Draw two columns on rough paper: Add and Deduct.
For a favourable balance, ask: does this item make the bank's balance higher than mine? If yes, add. If lower, deduct.
Cheques you issued but not presented: the bank still holds the money, so it is higher. Add.
Cheques you deposited but not collected: the bank has not given you the money. Deduct.
Bank credits you directly (interest, collections): Add. Bank debits you directly (charges, dishonour): Deduct.
For an overdraft, flip every sign. Do the whole statement in this order and then total once.
Write the fair copy in format with dates. Show clean labels because step marks are given for each item.

Common mistakes in Preparing BRS Starting from Cash Book Balance

Using the favourable-balance rules when the cash book shows an overdraft.
Students memorise add/deduct rules and forget to check the nature of the opening balance.
Fix: Underline the starting balance. If it is an overdraft, flip every add and deduct.
Adding cheques deposited but not yet collected.
Students think a deposit increases the balance, forgetting the bank has not credited it.
Fix: Ask what the bank shows. Bank has not credited it, so the pass book is lower. Deduct (favourable).
Ignoring items already in both books.
Students feel every item in the question must be used.
Fix: Only items recorded in one book and not the other belong in the statement. Leave out items already in both.
Reversing the rule for dishonoured cheques and bank charges.
Students treat them as receipts since a cheque was originally deposited.
Fix: Both are debits by the bank. In a favourable balance they are deducted.
Closing the statement with the wrong label or no label.
Rushing through the last line.
Fix: End with 'Balance as per Pass Book' and mention favourable or overdraft.
Missing a cash book error in the list.
The error is buried in the wording, for example an amount entered twice on the debit side.
Fix: Correct the cash book error as a separate line item with the correct sign.

Worked examples

Example 1

On 31 March 2025 the cash book of Mehta Traders shows a bank balance of ₹48,000 (Dr). Cheques issued of ₹9,000 have not been presented. Cheques deposited of ₹14,000 have not been collected by the bank. The bank has credited ₹2,000 interest not recorded in the cash book and debited ₹500 bank charges not recorded. Prepare a BRS starting from the cash book balance.

Show the solution

Starting balance is favourable: ₹48,000.
Cheques issued but not presented: add ₹9,000. The bank has not yet paid them, so its balance is higher.
Cheques deposited but not collected: deduct ₹14,000. The bank has not credited them.
Interest credited by bank: add ₹2,000.
Bank charges debited by bank: deduct ₹500.
Total additions: 9,000 + 2,000 = ₹11,000. Total deductions: 14,000 + 500 = ₹14,500.
Pass book balance = 48,000 + 11,000 − 14,500 = ₹44,500.

Answer: Balance as per Pass Book as on 31 March 2025 is ₹44,500 (favourable).

Example 2

On 30 June 2025 the cash book of Rao & Co. shows a bank overdraft of ₹20,000. Cheques issued of ₹6,000 have not been presented. Cheques deposited of ₹10,000 have not been collected. A customer deposited ₹4,000 directly in the bank, not yet recorded in the cash book. The bank debited ₹300 as charges, not recorded in the cash book. Find the balance as per the pass book by starting from the cash book.

Show the solution

First line: Overdraft as per Cash Book ₹20,000 (Cr). The rules are reversed.
Add: cheques deposited but not collected ₹10,000. The bank has not credited them, so its overdraft is larger.
Add: bank charges ₹300. The bank has debited them and the cash book has not, so its overdraft is larger.
Total additions: 10,000 + 300 = ₹10,300.
Less: cheques issued but not presented ₹6,000. The bank has not paid them, so its overdraft is smaller.
Less: direct deposit by customer ₹4,000. The bank has credited it and the cash book has not, so its overdraft is smaller.
Total deductions: 6,000 + 4,000 = ₹10,000.
Overdraft as per Pass Book = 20,000 + 10,300 − 10,000 = ₹20,300.

Answer: Balance as per Pass Book as on 30 June 2025 is an overdraft of ₹20,300.

Exam tips

Write the heading with the date and the first line stating whether the cash book balance is favourable or overdraft. This earns presentation marks.
Show each item on its own line with a short label such as 'Cheques issued but not presented'. Do not merge items.
Do not include items already recorded in both books; examiners often add them as distractors.
If the question mentions a cash book error, treat it as a separate line and mention the correct effect on the balance.
Use a quick cross-check: do the final balance and the pass book figure agree in nature, favourable or overdraft?

Practice questions from Bank Reconciliation Statement

Preparing BRS Starting from Cash Book Balance: frequently asked questions

How do I prepare a BRS starting from the cash book balance?

Write the cash book balance first. Then add or deduct each reconciling item using the favourable or overdraft rule. The final figure is the balance as per the pass book.

What is the add or deduct rule for a favourable balance?

Add cheques issued but not presented and amounts credited by the bank but not in the cash book. Deduct cheques deposited but not collected and amounts debited by the bank but not in the cash book.

What changes if the cash book shows an overdraft?

Every sign reverses. Items that you would add for a favourable balance are deducted, and items you would deduct are added. The result is the pass book overdraft.

Should I make journal entries for BRS items?

A BRS itself is a statement, not a ledger account. Entries are needed only if you are asked to correct the cash book. For a pure BRS question, list the items and compute the balance.