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Fundamentals of Accounting · Bank Reconciliation Statement

How to Prepare an Adjusted Cash Book for BRS

Updated 11 October 2026 · Fact-checked

An adjusted cash book is your cash book after you record items the bank has already entered and correct your own mistakes. Update it first, find the new balance, then reconcile with the pass book using only timing differences and bank errors.

Understand Adjusted Cash Book and Rectifying Errors in BRS

Your cash book and the bank's pass book record the same bank account from two sides. They rarely match on a given date. Some differences are only timing. Others mean one party has not recorded something or has made a mistake.

Timing differences need no change in your books. A cheque you issued may not yet be presented. A cheque you deposited may not yet be credited. These stay in the BRS only.

Other items need action in your cash book. Bank charges, interest charged, interest or dividend collected by the bank, direct deposits by customers, standing-instruction payments and dishonoured cheques are already in the pass book. Your cash book does not show them yet. You must record them. Errors you made in the cash book, such as a wrong amount, a wrong total or an entry on the wrong side, must also be corrected.

The adjusted cash book does this job. It brings your cash book up to date. After that, the only differences left are timing items and errors made by the bank. A bank error is never corrected in your books. You ask the bank to fix it, and you show it in the BRS.

This is why a question that asks for the balance as per cash book often needs two steps. First you reconcile from the pass book to the corrected balance. Then you reverse the adjustments to get the balance before them.

Key rules to remember

Adjusted cash book (debit balance)
Adjusted balance = Old cash book balance + items increasing the bank balance − items decreasing the bank balance
Add direct deposits, interest and dividend collected by the bank. Subtract bank charges, interest charged, dishonoured customer cheques and direct payments. If a payment was under-recorded in the cash book, subtract the difference. If a payment was over-recorded, add the difference.
Which items go where
Pass book items missing in cash book and cash book errors → adjust cash book. Timing items and bank errors → BRS only
This split decides every question.
BRS from adjusted cash book (favourable balance)
Pass book balance = Adjusted cash book balance + cheques issued not presented − cheques deposited not credited − amount wrongly debited by bank + amount wrongly credited by bank
Use this when the adjusted cash book balance is known and the pass book balance is asked.
BRS from pass book (credit balance)
Adjusted cash book balance = Pass book balance − cheques issued not presented + cheques deposited not credited + amount wrongly debited by bank − amount wrongly credited by bank
Use this when the pass book balance is given and the cash book balance is asked.

How to solve Adjusted Cash Book and Rectifying Errors in BRS questions

Use this order for any question. Do not mix adjustment items with BRS items.

  1. 1Note the starting balance and whether it is a debit (favourable) or credit (overdraft) balance in the cash book.
  2. 2Go through every item and label it: A for cash book adjustment, B for timing difference, C for bank error.
  3. 3Write the adjusted cash book. Start with the old balance, add or subtract each A item, and fix cash book errors by the difference only.
  4. 4Find the adjusted balance. Check each sign once.
  5. 5Prepare the BRS from the adjusted balance. Include only B and C items with correct signs.
  6. 6Reach the pass book balance. If it is given, check that your BRS matches it.
  7. 7If the question asks for the old cash book balance, reverse the A items from the adjusted balance.
  8. 8Write the final answer with Dr or Cr and a clear heading.

Quickest way: Three-pile sorting method

When to use it: Use it when a question has six or more items and you have little time.

  1. Draw three columns: Cash Book, BRS, Bank error.
  2. Put each item in one column in a single pass. Ask: Is it already in my cash book? If not, and it is in the bank record, it goes in Cash Book.
  3. Total the Cash Book column with signs and get the adjusted balance in one line.
  4. Apply the BRS column and bank error column in one line to reach the pass book balance.
  5. Tick that every item is used once.

Common mistakes in Adjusted Cash Book and Rectifying Errors in BRS

  • Putting bank charges or dishonoured cheques in the BRS instead of the adjusted cash book.

    Students treat every difference as a BRS item.

    Fix: If the bank has recorded it and you have not, record it in the cash book. It is not a timing difference.

  • Correcting a cash book error with the full amount instead of the difference.

    Students forget that part of the amount is already recorded.

    Fix: Use only the difference. If a payment of ₹2,700 was entered as ₹2,070, the correction is ₹630.

  • Changing the cash book for a bank error.

    Students think any mistake must be fixed in their own books.

    Fix: Bank errors are shown in the BRS. The bank corrects its own records.

  • Wrong sign for cheques issued but not presented and cheques deposited but not credited.

    Students memorise signs without thinking about what each does to the bank balance.

    Fix: Ask which balance is larger. Unpresented cheques mean the pass book is higher than the cash book. Uncredited deposits mean the pass book is lower.

  • Ignoring an overdraft and adding items as if the balance were favourable.

    Students overlook the words credit balance in the cash book or overdraft.

    Fix: Mark the balance as Dr or Cr first. Items that raise the bank balance reduce an overdraft.

  • Giving the adjusted cash book balance when the old cash book balance is asked.

    Students stop after the BRS.

    Fix: Reverse the cash book adjustments from the adjusted balance to reach the balance before them.

Worked examples

Example 1

The cash book of Sharma Traders shows a bank debit balance of ₹45,000. The pass book shows items not in the cash book: bank charges ₹250, interest credited by the bank ₹1,200, a customer's cheque of ₹4,000 dishonoured, and a direct deposit of ₹6,000 by a customer. A cheque payment of ₹2,700 was entered in the cash book as ₹2,070. Cheques issued but not presented are ₹8,000. Cheques deposited but not yet credited are ₹5,000. Prepare the adjusted cash book and find the pass book balance.

Show the solution
  1. Start with the old balance: ₹45,000 debit.
  2. Add interest credited ₹1,200: 45,000 + 1,200 = ₹46,200.
  3. Add the direct deposit ₹6,000: 46,200 + 6,000 = ₹52,200.
  4. Subtract bank charges ₹250: 52,200 − 250 = ₹51,950.
  5. Subtract the dishonoured cheque ₹4,000: 51,950 − 4,000 = ₹47,950.
  6. Correct the payment error. The payment was under-recorded by 2,700 − 2,070 = ₹630, so subtract it: 47,950 − 630 = ₹47,320. This is the adjusted cash book balance.
  7. BRS: Adjusted cash book balance ₹47,320. Add cheques issued not presented ₹8,000 to get ₹55,320.
  8. Less cheques deposited not credited ₹5,000 to get ₹50,320.

Answer: Adjusted cash book balance is ₹47,320 (Dr). Balance as per pass book is ₹50,320.

Example 2

The pass book of Mehta & Co. shows a credit balance of ₹38,500. Cheques issued but not presented are ₹6,000. Cheques deposited but not yet collected are ₹9,500. The bank wrongly debited ₹1,500 to the firm's account. Not yet in the cash book: bank charges ₹300 and a dividend of ₹2,000 collected directly by the bank. Find the balance as per cash book before any adjustment.

Show the solution
  1. Start with the pass book balance ₹38,500 (credit, which is a favourable balance).
  2. Add the amount wrongly debited by the bank ₹1,500: 38,500 + 1,500 = ₹40,000.
  3. Subtract cheques issued but not presented ₹6,000: 40,000 − 6,000 = ₹34,000.
  4. Add cheques deposited but not yet collected ₹9,500: 34,000 + 9,500 = ₹43,500. This is the adjusted cash book balance.
  5. The adjustments to be made in the cash book were: dividend +₹2,000 and bank charges −₹300, a net +₹1,700.
  6. Reverse them to find the old balance: 43,500 − 1,700 = ₹41,800.
  7. Check: 41,800 + 2,000 − 300 = ₹43,500, which agrees.

Answer: Balance as per cash book before adjustments is ₹41,800 (Dr). The adjusted balance is ₹43,500.

Exam tips

  • Label every item as cash book, timing or bank error before writing any figure. Examiners give marks for correct treatment.
  • Show the adjusted cash book as a separate working with the old balance and each item. Partial marks are given even if one sign slips.
  • If a question asks for the balance as per cash book, check whether it means before or after adjustment, and reverse the adjustments only if before.
  • For cash book errors, compute the difference in rupees and note whether it raises or lowers the bank balance.
  • Finish by checking that the BRS agrees with the given pass book balance. A mismatch shows a wrong sign.

Practice questions from Bank Reconciliation Statement

Adjusted Cash Book and Rectifying Errors in BRS in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Adjusted Cash Book and Rectifying Errors in BRS: frequently asked questions

What is an adjusted cash book in BRS?

It is your cash book after you add items the bank has recorded but you have not, and correct your own errors. It gives the correct bank balance in your books. You then reconcile it with the pass book.

Do bank errors go into the adjusted cash book?

No. Bank errors are shown only in the BRS because the bank must correct them. Your cash book is changed only for your own errors and for items the bank has recorded that you have not.

How do I find the balance as per cash book when the pass book balance is given?

Start from the pass book balance and apply timing items and bank errors to reach the adjusted cash book balance. If the old cash book balance is asked, reverse the cash book adjustments from that figure.

Which items need a change in the cash book before preparing the BRS?

Bank charges, interest charged by the bank, interest or dividend collected by the bank, direct deposits, direct payments and dishonoured cheques. Errors made in the cash book also need correction.