A bank reconciliation statement is a summary of banking and business activity that reconciles an entity's bank account with its financial records. The statement outlines the deposits, withdrawals and other activities affecting a bank account for a specific period. Bank Reconciliation statement is also known as bank passbook. The balance mentioned in the bank passbook of the statement must tally with the balance mentioned in the cash book. In the statement, all the deposit will be shown in the credit column, and withdrawals will be shown in the debit column. However, if the withdrawal exceeds the deposit, it will show a debit balance (overdraft). Generally, while making a comparison between the company's cash book and bank balance, the balance does not tally. Therefore, it is essential to determine the cause for the difference and display them in the bank reconciliation statement and then tally the two balances. The bank reconciliation statement helps in explaining the differences in the amount between the company's cash book and bank balance. The Bank Reconciliation Statement can be prepared in 2 ways: