Bank Reconciliation Statement (BRS) – Tally Prime

Bank Reconciliation Statement (BRS)

Understanding BRS and preparing bank reconciliation in Tally Prime

1. Concept of Bank Reconciliation Statement

Bank Reconciliation Statement (BRS) is a statement used to compare the balance shown by the company’s Cash/Bank Book with the balance shown by the Bank Statement/Passbook.

Ideally, the balance in the books and the bank statement should be the same. However, they may differ temporarily because transactions may be recorded by the company and the bank on different dates.

Common Reasons for Differences

Reason	Explanation	Effect
Cheque issued but not presented	The company has recorded the payment, but the supplier has not yet deposited the cheque into the bank.	Timing difference
Cheque deposited but not cleared	The company has recorded the receipt, but the bank has not yet credited the amount.	Timing difference
Bank charges	The bank deducts charges directly, but the company may not have recorded them yet.	Book balance needs adjustment
Bank interest	The bank credits interest directly into the account.	Book balance needs adjustment
Direct deposit by customer	A customer deposits money directly into the company’s bank account.	Book balance needs adjustment

Why is BRS important?

It confirms the accuracy of the bank balance.
It identifies transactions not yet recorded in the books.
It helps identify errors and omissions.
It tracks cheques that are still outstanding.
It makes bank-related accounting easier to control.

2. Cash Book vs Bank Statement

Cash/Bank Book	Bank Statement
Maintained by the business	Maintained by the bank
Records transactions from the company’s accounting records	Records transactions processed by the bank
May not immediately include bank charges or direct deposits	Usually reflects transactions processed directly by the bank

Important: A difference between the two balances does not always mean that an error has occurred. Many differences are simply due to timing.

3. Procedure of Preparing BRS in Tally Prime

Enable Banking Features

Open Gateway of Tally → F11 (Features) → Accounting Features and enable the relevant banking features.

Create Bank Ledger

Go to: Gateway of Tally → Accounts Info → Ledgers → Create.

Set the ledger group as:

Bank Accounts

Enter the bank details such as account number and IFSC wherever applicable.

Record Bank Transactions

Record receipts, payments, contra entries, cheque deposits, cheque payments and other transactions involving the bank.

Open the Bank Reconciliation Screen

Go to: Gateway of Tally → Banking → Bank Reconciliation.

Select the appropriate bank ledger to view the transactions that need reconciliation.

Match the Entries

Compare the transactions shown in Tally with the transactions appearing in the bank statement.

For transactions cleared by the bank, enter the appropriate Bank Date (the date on which the bank processed or cleared the transaction).

Transactions for which the bank date has not been entered or which have not yet cleared remain unreconciled.

Save and Review Reconciliation

After matching the transactions, review the reconciled and unreconciled items.

Outstanding cheques and deposits will continue to appear as unreconciled until the bank clears them.

4. Worked Example – Bank Charges

Suppose:

Cash Book balance	₹50,000
Bank Statement balance	₹47,500
Bank charges not recorded in Cash Book	₹2,500

The bank has already deducted ₹2,500, but the company has not yet recorded the deduction.

Cash Book Balance − Bank Charges = Adjusted Cash Book Balance ₹50,000 − ₹2,500 = ₹47,500

Reconciled balance = ₹47,500

Once the bank charges are recorded in the books, the adjusted Cash Book balance agrees with the Bank Statement balance.

5. Understanding Bank Date in Tally Prime

The Bank Date is useful when the date on which a transaction is recorded in Tally differs from the date on which the bank actually clears the transaction.

Date	Event	BRS Status
01-Aug-2026	Cheque deposited and recorded in Tally	Unreconciled
05-Aug-2026	Bank clears the cheque	Reconciled

Before 05-Aug-2026, the cheque may remain unreconciled because the bank has not yet processed it. After the bank clears it, the bank date can be entered and the transaction becomes reconciled.

6. Practice Questions

Question 1

Cash Book shows a balance of ₹1,00,000. Bank Statement shows a balance of ₹95,000. A cheque of ₹5,000 was issued but has not yet been presented to the bank.

Tasks:

Prepare the BRS.
Determine the reconciled balance.
Explain how the outstanding cheque affects reconciliation.

Explanation: The cheque has been recorded in the books but has not yet been presented to the bank. Therefore, it remains an outstanding cheque and represents a timing difference.

Reconciled balance = ₹95,000
The ₹5,000 cheque remains unreconciled until it is presented and cleared.

Question 2

On 01-Aug-2026, you deposited a cheque of ₹20,000. The bank cleared the cheque on 05-Aug-2026.

Tasks:

Record the cheque deposit in Tally Prime.
Explain how it appears in BRS before clearance.
Explain how it appears after the bank clears it.

Before clearance: The ₹20,000 deposit appears as an unreconciled transaction because the bank has not yet cleared it.

After clearance: Enter 05-Aug-2026 as the Bank Date. The transaction becomes reconciled.

Question 3

The Bank Statement shows an automatic debit of ₹1,200 as bank charges. This amount has not been recorded in the books.

Tasks:

Pass the required accounting entry in Tally Prime.
Explain the effect on the Cash/Bank Book balance.
Explain how the BRS is affected before the entry is recorded.

Accounting treatment:

Bank Charges A/c Dr. ₹1,200
To Bank A/c ₹1,200

The Cash/Bank Book balance decreases by ₹1,200. Before recording the entry, the Bank Statement will show a lower balance than the books.

Question 4

A customer directly deposits ₹15,000 into the company’s bank account. The transaction has not yet been recorded in the books.

Tasks:

Record the transaction in Tally Prime.
Explain the effect on the Cash/Bank Book.
Explain how BRS adjusts the difference.

Accounting treatment:

Bank A/c Dr. ₹15,000
To Customer/Debtor A/c ₹15,000

The Bank Statement will show the ₹15,000 receipt before it is recorded in the company’s books. Therefore, the Bank Statement balance will be higher than the Cash/Bank Book by ₹15,000.

Once the entry is recorded in Tally, the difference is eliminated.

Question 5

Three cheques are deposited into the bank:

Cheque	Amount	Bank Status
Cheque 1	₹10,000	Cleared
Cheque 2	₹12,000	Cleared
Cheque 3	₹8,000	Not cleared

Tasks:

Calculate the total amount deposited.
Calculate the amount cleared by the bank.
Calculate the unreconciled amount.
Explain how these transactions will appear in Tally Prime BRS.

Solution:

Total deposited: ₹10,000 + ₹12,000 + ₹8,000 = ₹30,000

Amount cleared: ₹10,000 + ₹12,000 = ₹22,000

Unreconciled amount: ₹30,000 − ₹22,000 = ₹8,000

Therefore, ₹22,000 is reconciled and ₹8,000 remains unreconciled until the third cheque is cleared by the bank.

7. Quick BRS Reference

Cheque Issued

Recorded in books but not presented to bank.

Timing Difference

Cheque Deposited

Recorded in books but not yet cleared by bank.

Unreconciled

Bank Charges

Deducted by bank but not yet recorded in books.

Record in Books

Direct Deposit

Received directly into bank but not yet recorded in books.

Record in Books

Bank Interest

Credited by bank but may not yet be recorded in books.

Record in Books

8. Exam & Practical Tip

Remember the basic principle:

BRS is primarily a reconciliation tool. First identify whether the difference is caused by a timing difference or by a transaction that has not yet been recorded in the books.

In Tally Prime, use the Bank Date to mark transactions that have actually been processed by the bank.

BRS = Cash/Bank Book Balance ↔ Bank Statement Balance Difference = Timing Differences + Unrecorded Bank Transactions + Errors (if any)