Bank statement

What it means

A document issued by a bank listing the transactions on an account over a period and the resulting balance from the bank's viewpoint.

Example

The statement shows a balance of RM4,200, while the cash book shows RM4,000 before reconciling.

Why it matters

It is compared with the cash book to prepare a bank reconciliation and catch errors or omissions.

In practice

The bank statement is an external document. It is not part of the business's own double-entry system. It is the source used to prepare the bank reconciliation statement, which supports the bank balance in the statement of financial position. It is written from the bank's point of view, so its columns are the mirror image of the cash book. Money the business has deposited appears as a credit on the statement. Payments out appear as debits.

For example, suppose the cash book shows a debit balance of RM1,200 at the bank. The statement will normally show a matching credit balance of RM1,200 when everything has cleared.

Students often confuse it with the cash book, which is the business's own internal record of bank transactions. Differences between the two come from timing and from items the bank knows about first, such as charges or interest. That is why the two records are compared and reconciled.

If reading a bank statement against the cash book feels back to front, one of our teachers can walk through a full reconciliation with you. Book a trial class.

Related terms

• Bank reconciliation
• Cash book
• Unpresented cheque
• Bank charges
• Credit transfer

Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 2.2 Business documents (page 12); sub-topic 3.3 Bank reconciliation (page 13).

Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.