Bank reconciliation statement is a statement prepared for determining causes of differences and. reconciling bank balance (as per the Cash Book) with the balance as per the Pass Book or vice versa. Bank Reconciliation Statement (BRS) is prepared when the bank balance of the Cash Book is not equal to the balance shown by the Pass Book on the same date (when BRS is being prepared). In order to match the two respective balances, errors and omissions are to be located and rectified, which is the main rationale behind preparing the Bank Reconciliation Statement. 

The need for preparation of Bank Reconciliation Statement is: 

• It helps in finding out the errors and omissions committed in the Cash Book and in the Pass Book. 

• It shows uncleared cheques that have already been debited in the Cash Book but have not yet been recorded in the Pass Book. 

• It helps in checking embezzlement of money from the bank account.

• It helps in measuring the accurancy of transactions recorded in the Cash Book. 

• It facilitates in preparing revised cash book that reflects a true bank balance.