Difference between these two records are as follows:
(i) Timing differences:
(a) Cheque issued but not presented for payment.
(b) Cheque deposited into bank but not yet credited.
(c) Bank charges and interest on loan/overdraft
(d) Interest and dividends collected by the bank.
(e) Dishonour of cheques and bills.
(f) Amount paid by the parties directly into the bank
(g) Payment made directly by the bank to others.
(h) Bills collected by the bank on behalf of its customers.
(ii) Error in casting:
(a) Errors committed in recording the transactions by the business in the cash book.
(b) Errors committed in recording the transactions by the bank.

The items having the effect of lower balance in the Pass book.
(i) Cheques deposited but not credited by the bank.
(ii) Dishonoured cheques appeared in the pass book but not entered in the cash book.
(iii) Bank charges as per pass book.
(iv) Wrong debit by banker.
(v) Payments as per standing instructions of customers

The items having the effect of Higher balance in the cash book.
(i) Cheques issued but not presented for payment.
(ii) Interest credited by the bank but not recorded in cash book.
(iii) Debtors directly paid into bank but not recorded in cash book.
(iv) Wrong Credit by the banker.
(v) Collections by banker as per customer's standing instructions

1. Errors committed in recording the transactions by the business:
(i) Sometimes errors may be committed in the cash book. For example, omission or wrong recording of transaction relating to cheques deposited or issued, wrong balancing, etc.
(ii) In these cases, obviously, there will be differences between bank balance as per bank statement and bank balance as per cash book.
2. Errors committed in recording the transactions by the bank
(i) Sometimes errors may be committed in the banker's book. For example, omission or wrong recording of transaction relating to cheques deposited and wrong balancing.
(ii) In these cases, obviously, there will be differences between bank balance as per bank statement and bank balance as per cash book.

The needs for bank reconciliation statement are:
a) To identify the reasons for the differences between the bank balance as per the cash book and bank balance as per bank statement
b) To identify the delay in the clearance of cheques
c) To ascertain the correct balance of bank column of cash book
d) To discourage the accountants of the business as well as bank from misusing funds.