What are The Two Main Parts of A Bank Statement

What are The Two Main Parts of A Bank Statement

Society has excelled a lot in the world of commerce - from the olden ways of the barter system to a very intricate set of documents and statements, where numbers and transactions can easily become overwhelming.

A bank statement serves as your guiding light. It's more than just a piece of paper or a digital document; it's your financial snapshot, your fiscal compass.

Why is it so crucial?

Imagine sailing a ship without a compass, blindly navigating the treacherous waters of your finances. That's what it feels like when you neglect your bank statement.

This humble document provides a clear and concise overview of your financial world. It's your key to comprehending the ebb and flow of your money.

Two Key Parts of the Bank Statement

Now, while a bank statement may appear mysterious at first glance, it's actually quite straightforward. Within its pages lie two main parts, each with a distinct purpose.

In this blog, we're about to shed light on these two pillars of financial clarity, unraveling their significance in helping you manage your funds with confidence. So, let's set sail on this financial voyage as we explore the two main parts of the bank statement that hold the secrets to your financial success.

Bank Statement Overview

A bank statement is like a financial report card that your bank gives you. It shows how much money you have in your bank account and what you've done with it. It's an important tool for managing your money wisely because it helps you keep track of your transactions and make sure everything adds up.

In this section, we'll dive deeper into the bank statement and explore its two main parts that reveal all your financial activity. Understanding these parts will empower you to take control of your finances.

Part 1: The Account Summary

The first main part of a bank statement is the account summary, and it's like the starting point of your financial journey. In this section, you'll find essential information that gives you a snapshot of your account's financial status.

What's Inside the Account Summary?

Here's a breakdown of what you can usually find in this part:

  1. Opening Balance: This is where your financial story begins for the specific time period covered by the statement. It's the amount of money you had in your account at the beginning.
  2. Deposits: These are the cash injections into your account during the statement period. Deposits can include your salary, payments, or any money you added to your account.
  3. Fees: Sometimes, banks charge fees for various services, like account maintenance or transaction processing. These fees are subtracted from your account balance.
  4. Closing Balance: This is like the cliffhanger at the end of a financial chapter. It shows you how much money is left in your account after all the transactions, deposits, and fees.

Let's Illustrate with an Example

Imagine you start the month with $1,000 in your account (the opening balance). During the month, you receive your salary of $2,000 (deposits), but your bank charges you a $20 service fee (fees). At the end of the month, your account shows a closing balance of $2,980.

So, in this case, your financial journey for that month began with $1,000, had $2,000 added in deposits, subtracted $20 in fees, and ended with $2,980. This is the story the account summary tells you.

Understanding this part of your bank statement gives you a clear picture of your financial starting point, the money you've earned, any expenses incurred, and where you stand at the end of the financial chapter. It's like reading the first few pages of a book to know what's ahead.

Part 2: Transaction Details

Now, let's dive into the second main part of a bank statement: transaction details. This part is like the chapters of your financial book, where all the action happens, and every move you make is recorded.

What You'll Find in Transaction Details

Here are the key elements you can expect to see in this section:

  1. Transaction Dates: These are the timestamps of when each financial action took place. They help you follow the chronological order of events.
  2. Descriptions: Descriptions provide information about the nature of each transaction. For example, it might say "Grocery Store Purchase" or "Paycheck Deposit."
  3. Amounts: This is the cold, hard cash—how much money went in or out of your account with each transaction.
  4. References: Often, transactions are assigned reference numbers or codes. These help you match the entries in your bank statement with your records or receipts.

Let's Break It Down with an Example

Imagine you made a series of transactions in a month:

  • On the 5th, you paid $100 for groceries (Transaction Date: 5th; Description: Grocery Store Purchase; Amount: -$100).
  • Then, on the 12th, you received your monthly salary of $3,000 (Transaction Date: 12th; Description: Paycheck Deposit; Amount: +$3,000).
  • Later, on the 20th, you paid your utility bill of $80 (Transaction Date: 20th; Description: Utility Bill Payment; Amount: -$80).

These transactions would appear in your bank statement's transaction details section, just like chapters in your financial story. They show when, where, and how much money flowed in and out of your account as illustrated in the image below.

Now, let's uncover the reasons why the bank's ending cash balance and your company's ending cash balance might not match up perfectly. These common discrepancies are like little puzzles in your financial story:

  1. Deposits in Transit: Imagine you've deposited money into your account right before month-end. You've recorded it, but it hasn't shown up on your bank statement yet. These are "deposits in transit."
  2. Outstanding Checks: You've written checks for expenses, but they haven't been cashed or processed by the recipients. Until they are, your bank balance won't reflect these deductions.
  3. Bank Service Fees: Banks provide services, and they might charge you for them. These fees, while usually small, can chip away at your balance.
  4. Interest Income: Sometimes, your bank pays you interest on your account balances. It's like a little bonus for keeping your money with them.
  5. Not Sufficient Funds (NSF) Checks: If you deposit a check, but the issuer doesn't have enough funds to cover it, the bank deducts the check amount from your account, returning it as an NSF check.

Bank Reconciliation Process

Now, let's dive into the nitty-gritty of reconciling your bank statement. It's like solving a financial puzzle to make everything align perfectly. Here's how you do it:

  1. Compare Transactions: Begin by taking your bank statement and comparing it to your company's list of issued checks and deposits. Look for any differences, like uncleared checks and deposits in transit.
  2. Adjust for Deposits in Transit: If you find deposits that haven't appeared on your bank statement yet, add them back to your bank cash balance.
  3. Account for Outstanding Checks: Those checks you've written but haven't been cashed? Deduct them from your bank balance.
  4. Calculate Adjusted Bank Balance: Now, you have the adjusted bank cash balance, which accounts for deposits in transit and deducts outstanding checks.
  5. Include Interest and Notes Receivable: Add any interest earned and notes receivable to your company's ending cash balance.
  6. Subtract Fees and NSF Checks: Deduct bank service fees, penalties, and NSF checks from your ending cash balance.
  7. Match Balances: After all these steps, your adjusted bank balance should match your company's adjusted cash balance.


In the intricate world of finance, where numbers and transactions often seem like an endless labyrinth, a bank statement becomes your guiding light. It's not just a piece of paper or a digital document; it's your financial snapshot, your fiscal compass.

Understanding your bank statement empowers you to take control of your finances, providing insights into your financial story and helping you make informed decisions.

It's like reading the first few pages of a book to get a glimpse of what lies ahead in your financial journey. With these insights, you're better equipped to manage your money wisely and sail smoothly through the financial seas.