BANK RECONCILIATION STATEMENT:
                                    A Bank reconciliation is a process that explains the difference between the bank balance shown in an organisation's Bank statement, as supplied by the bank, and the corresponding amount shown in the organisation's accounting records at a particular point in time. 

RECORDING:

                                            A transaction relating to bank has to be recorded in both the books i.e.  Cash Book and Pass Book but sometimes it happens that a  bank transaction is recorded only in one book and not recorded simultaneously in other book causing difference in the two balances.

EXAMPLE:

                   We operate a bank account in which we deposit money and withdraw money from time to time. We maintain a record with ourselves of these deposits and withdrawals. One day we get our pass-book (statement issued by the bank) updated but are surprised to find that the balance shown by the pass book was different from what it should have been as per our records.

                                                                              Then it is obvious that we will compare the two sets of records and find out items which are recorded in one but not in the other. Similar situation may arise in case of a business concern which operates a bank account. These business concerns maintain record of all of their banking transactions in their bank column of the cash book.

DIFFERENCES BETWEEN BANK STATEMENT AND 

CASH BOOK BALANCES:

                                                                        On any particular date the bank balance shown by the bank column cash book and that shown by the pass book should be the same. But if there is difference between the two, the business concern will find out the reasons to reconcile the balance.

Following Points are considered;

• Compare transactions that appear on both Cash Book and Bank Statement
• Update Cash Book from details of transactions appearing on Bank Statement
• Balance the bank columns of the Cash Book to calculate the revised balance
• Enter correct date of the statement
• Enter the balance at bank as per the Cash Book
• Enter details of unpresented cheques
• Enter sub-total on reconciliation statement
• Enter details of bank lodgements
• Calculate balance as per Bank Statement

ACCOUNTING CYCLE.

accounting cycle is generally refers to as involving various steps for business transactions and these steps are performed repeatedly.these are also followed for the preparation of financial statements.

STEPS INCLUDED:

• journal entries 
• ledger accounts
• trial balance
• adjusting entries
• adjusted trial balance
• closing entries
• closing trial balance
• financial statements

1.JOURNAL.

       "analysing business transactions and recording them into journal entries form on day to day basis"

basic type of journal is known as general journal.we record business transactions on day to day basis on a double entry system in it.

2.LEDGER ACCOUNTS.

next step involves the posting of journal entries into ledger accounts. every journal entry has a ledger account. it has a debit or credit balance.which is transfered to trial balance.

3.TRIAL BALANCE.

it is defined as "a statement of all the debit and credit items,made to test their accuracy."

 trial balance contains the all debit and credit balances of ledger accounts. it is made under the instruction of IAS. an unadjusted trial balance is made before any adjustment is made in a ledger.

4.ADJUSTING ENTRIES.

  An accounting entry made at the end of accounting period to allocate items between accounting period."

these entries are made at end of accounting period to adjust the ledger accounts.the main purpose is to match the expenses and revenues whichnis required by matching principle of accounting.

5.ADJUSTED TRIAL BALANCE.

after adjusting entries and posting them to ledgers,adjusted trial balance is made.it contains all balances of ledgers after adjusting entries done. 

6.CLOSING ENTRIES.

some accounts are closed in order to make their balances zero at the end of accountind period.these accounts include:

revenues

expenses

income summary

dividend

7.CLOSING TRIAL BALANCE.

it is made after closing entries posted to ledgers. the purpose of it is to assure that the total of debit is equal to total of credit before the new accounting period start.

8.FINANCIAL STATEMENTS.

financial statements presents the picture of financial position and position over period of time.it is the true picture of accountind information. some of them are:

income statement 

balance sheet etc..