Legal Definitions - bank statement

A bank statement is a formal document issued by a financial institution, such as a bank or credit union, that provides a detailed summary of all financial transactions for a specific account over a defined period, typically one month. It includes a record of deposits, withdrawals, transfers, fees, and the opening and closing balances, offering a comprehensive overview of the account's activity.

Here are some examples illustrating the use of a bank statement:

• Personal Budgeting and Verification: Maria receives her monthly bank statement for her personal checking account. She reviews it to track her spending on various categories like groceries, utilities, and entertainment. She also uses it to confirm that her paycheck was correctly deposited and that all automatic bill payments were processed as expected.

  This example illustrates how a bank statement serves as a detailed record of an individual's income and expenses, enabling them to manage their personal budget and verify the accuracy of transactions.

• Business Financial Reconciliation: A small business owner, John, uses his company's bank statement at the end of each month. He compares the transactions listed on the statement with his internal accounting software to reconcile his books. This process helps him identify any discrepancies, confirm payments received from clients, and verify payments made to suppliers, ensuring his financial records are accurate.

  This demonstrates how a bank statement is a critical tool for businesses to perform financial reconciliation, ensuring that their internal records match the bank's official record of all monetary movements.

• Loan and Credit Applications: When applying for a car loan, Sarah is asked by the lender to provide her bank statements from the past three months. The lender uses these statements to verify her income, assess her regular expenses, and confirm that she has a stable financial history and sufficient funds for the down payment and monthly loan repayments.

  This example shows how a bank statement acts as an official record of an individual's financial activity and stability, which third parties, such as lenders, use to evaluate creditworthiness and financial capacity.