Educational article

Bank Reconciliation: A Worked Example and Month-End Checklist

By CA. Narendra Vasavan R

Published October 13, 2026 · Modified October 13, 2026

Check the relevant period and current official sources. A publication date is not confirmation that the content is current.

In brief: Bank reconciliation explains why the bank balance in your accounting records differs from the balance on the bank statement at the same date. The aim is to account for each difference, not simply to make two numbers look equal.

For a small business, this is a practical record-checking exercise. It can identify missing entries and unresolved transactions, but a completed reconciliation is not an audit opinion or a guarantee that fraud is absent.

Two records, one comparison date

The cash book or bank ledger shows transactions recorded by the business. The bank statement shows transactions recorded by the bank. Use the same account and closing date when comparing them.

Differences commonly involve timing, entries recorded by only one side, or errors. A cheque payment may already be in the cash book while the bank has not yet cleared it. Conversely, a bank charge may appear on the statement before it has been entered in the business records.

Worked example: a positive bank balance

Illustrative figures only; this is not client data. Assume one bank account, positive balances and no differences other than those below.

After recording the supported bank-charge entry, the cash-book balance is ₹98,000 − ₹2,000 = ₹96,000.

Starting from the bank-statement balance, the reconciliation is ₹86,000 + ₹30,000 − ₹20,000 = ₹96,000.

The balances now agree. The deposit and cheque payments remain timing items to follow up. They are already in the cash book, so recording them there a second time would duplicate the transactions. Overdrafts and other adjustments require careful treatment of signs; do not apply this example mechanically.

A practical month-end routine

1. Gather: Obtain the statement, ledger and previous reconciliation.
2. Match: Compare amounts, dates and references; mark matched entries.
3. Separate: List timing items apart from missing entries and errors.
4. Correct: Record supported, authorised book adjustments. Ask the bank about suspected bank errors.
5. Explain: Prepare the reconciliation and attach evidence for every unresolved item.
6. Follow up: Assign a person to investigate old items and confirm later clearance.

Checks before closing the exercise

• Are the account and comparison date the same?
• Have bank-only entries been reviewed and supported?
• Are timing differences listed without duplicate book entries?
• Does every remaining difference have an explanation and follow-up owner?
• Has someone appropriate reviewed the reconciliation?

Do not post an unexplained balancing amount to an expense or suspense account simply to finish the exercise. A matching total is useful only when the underlying transactions are understood.

Does this need a separate resource?

A checklist is useful here because reconciliation is a repeatable task. Bank_Reconciliation_ChecklistReaders can use the checks above directly; a downloadable worksheet is optional, not a condition for understanding the article.Bank_Reconciliation_Checklist

Reference and scope

For further study, see ICAI’s Accounting study material, Chapter 3: Bank Reconciliation Statement. This article and its numerical example are independently written educational explanations, not reproduced ICAI study material or an ICAI-endorsed resource.

Another reference is OpenStax, Principles of Accounting: bank reconciliation and associated journal entries. No source example, illustration or exercise has been copied into this article.

Sources checked: 12 October 2026. General educational information only; adapt the process to the actual records, circumstances and applicable accounting requirements.

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