Bank Statement: Definition, Use, Importance, Sample, Example

A bank statement is a statement issued (usually monthly) by a bank describing the activities in a depositor’s checking account during the period.

A bank statement is a statement of the depositor’s bank account containing detailed particulars of deposits and withdrawals including interest accrued and bank charges for a particular period, usually for a month.

A bank statement contains the following contents;

  1. Depositor’s deposit for a particular period.
  2. Depositor’s Withdrawals or payments of cheques from his/her account by the bank for a particular period.
  3. Deductions from depositor’s bank account during a particular period such as service charge, NSF (Not sufficient fund,) safe deposit box rent, printing cost of cheques, etc.
  4. Cheque deposit direct into depositor’s bank account, a deposit of a collection of notes receivable including interest and deposit of average interest on the deposits.

Example of Bank Statement

why bank statement is used

Bank Statement Format

A typical bank statement has two main parts;

  1. the account summary,
  2. transaction detail.

The account summary is at top of the first page that holds the opening balance, deposits, credits, added interest, back charges, and fees and ends with closing balance.

Transaction detail part shows everything in a chronological order; From day 1 to last of the period. Every transaction recorded with date, amount, the name of the payee or payer.

Related: Bank Reconciliation Statement Prepared [Definition, Types, Template]

Debit memorandum

The bank charges a monthly fee for services rendered. The bank usually charges a fee when the average bank balance of a bank chequing account comes down to a certain required amount of money.

These fees are called bank charge which is shown on the bank statement under code ‘SC.’ Bank sends a debit memorandum with the bank statement wherein the detail of bank charges is mentioned.

Related: 7 Reasons Why Depositors Book and Bank Statement Differs in Balance

Credit memorandum

A depositor/account holder may direct the bank to collect his/her note receivable. The bank deposits die realized proceeds of notes receivable in the bank account of the client.

The bank sends a credit memorandum for this transaction with the bank statement. Many banks pay interest on bank chequing accounts which is shown in the bank statement.

Read Related Posts /