(i) The cash book should be completed and the balance as per bank column on a particular date should be found out  covering the period for which the statement has to be prepared.

(ii) The bank should be requested to complete and send to the firm the bank pass book up to the date mentioned.

(iii) Check the entries of the debit and credit sides of the bank columns of the cash book with corresponding entries on the credit and debit sides of the pass book relating to the same period.

(iv) The items not tallying should be classified into common groups according to their characteristics.

(v) The balance as shown by any one book (i.e. the cash book or the bank pass book) should be taken as the base. This is, as a matter of fact, the starting point for determining the balance as shown by the other book after making suitable  adjustments taking into account the causes of difference.

(vi) The effect of the particular cause of difference on the balance shown by the other book should be noted.

(vii) In case, the cause has resulted in an increase in the balance shown by the other book, the amount of such increase should be added to the balance as per the former book which has been taken as the base.

(viii) In case, the cause has resulted in a decrease in balance shown by the other book, the amount of such decrease should be deducted from the balance as per the former book which has been taken as the base.