Errors in the reconciliation

An error is different from a time gap: one of the two records is simply wrong. In a BRS, adjust the starting balance so that it is corrected, as if the mistake had never happened, and moves towards the other record.

First find which book is wrong and by how much. Some errors in the cash book:

• A debit balance of ₹1,500 is brought forward as a credit balance. The book shows −1,500 instead of +1,500, so it is understated by ₹3,000 (twice the amount). Starting from the cash book, add ₹3,000.
• The payments side is undercast (added up too low). Too little is taken off, so the balance is overstated.
• A cheque is written in the cash column instead of the bank column, or an item is entered twice.

Errors by the bank in the passbook:

• A deposit of ₹1,589 credited as ₹1,598: the passbook is overstated by ₹9.
• A cheque payment recorded twice: the passbook balance is lower than it should be.
• Another customer's cheque or charge put in your account by mistake.

Illustration 7 in the book starts from a cash book of ₹10,000: + 1,000 + 200 − 250 + 3,000 − 100 − 121 − 500 + 300 = ₹13,529 as per passbook.

In practice, firms first correct the cash book for every item it should contain (bank charges, interest, direct deposits, its own errors). The BRS then needs to explain only what is left, mostly cheques not yet presented or collected, and the bank's own errors.