Principles of Accounting: Bank Statement

• It is a document or report released (on a fixed date every month) by banks
• It lists:
  • The balance at the beginning of the period
  • deposits,
  • withdrawals,
  • checks paid,
  • interest earned,
  • service charges
  •  penalties incurred if any
  • The balance at the end of the period
• on a given account
• It shows the cumulative effect of these transactions the account’s balance,
• up to the date the report was prepared
• Traditionally bank statements are sent out by banks to customers at the end of each month
• With the rise in the use of electronic banking, bank statements are often send out as electronic documents
• If required a bank statement can still be obtained as hard copy although banks charge a fee for the privilege
• Also with the rise in usage of online banking bank statements can be obtained at any moment and not just when the month end
• In accounting bank statements are an important source of information
• They are used in preparing bank reconciliation statements
• And verifying that certain debtors have settled their outstanding balances
• Bank statements are also used to verify that payment to certain creditors went through

To access more topics go to the Principles of Accounts Notes.