Bank Recon
Bank Reconciliation Statements (With answers)
A. Purpose of a bank reconciliation It should be prepared regularly as part of the internal control system of the business to check:
a) the accuracy of the cash book
b) the accuracy of the bank statement
c) that undue delay is not occurring between payments, receipts and their clearance by the bank
d) to discover payments made and items received by the bank not entered in the cash book
B. Reasons for differences in bank statement and cash book
a) The causes of difference will be fall into one of the following classes:
b) Items (not consisting of errors) which appear in the bank statement but which are not in the cash book, e.g., dishonoured cheques or bills, interest and bank charges, standing order (an order made to the bank to make a regular payment), dividends or interest income credited direct to the bank and payments by customers which are paid direct to the bank.
c) Items (not consisting of errors) which appear in the cash book but which do not appear in the bank statement. These are confined to outstanding cheques and outstanding deposits.
d) Errors made in the compilation of the cash book or the bank statement.
C. Two forms of bank reconciliation are in common usage:
1) The bank balance is reconciled to the balance in the depositor’s records (or the balance in the depositor’s records to the bank balance)
2) Both the bank balance and the balance per depositor’s records are reconciled to a correct balance.
Illustration
The cash book of J.Jones showed a balance at the bank of $570 in hand on 31 January 19X1. At the same date, the bank statement balance of J.Jones’ account was $446 overdrawn. The difference was accounted for as follows:
1) Cheques for $1 555 sent to creditors on 30 January were not paid by the bank until 8 February.
2) Cheques amounting to $2 520 paid into the bank on 31 January were not credited by the bank until 1 February.
3) A standing order for a charitable
A. Purpose of a bank reconciliation It should be prepared regularly as part of the internal control system of the business to check:
a) the accuracy of the cash book
b) the accuracy of the bank statement
c) that undue delay is not occurring between payments, receipts and their clearance by the bank
d) to discover payments made and items received by the bank not entered in the cash book
B. Reasons for differences in bank statement and cash book
a) The causes of difference will be fall into one of the following classes:
b) Items (not consisting of errors) which appear in the bank statement but which are not in the cash book, e.g., dishonoured cheques or bills, interest and bank charges, standing order (an order made to the bank to make a regular payment), dividends or interest income credited direct to the bank and payments by customers which are paid direct to the bank.
c) Items (not consisting of errors) which appear in the cash book but which do not appear in the bank statement. These are confined to outstanding cheques and outstanding deposits.
d) Errors made in the compilation of the cash book or the bank statement.
C. Two forms of bank reconciliation are in common usage:
1) The bank balance is reconciled to the balance in the depositor’s records (or the balance in the depositor’s records to the bank balance)
2) Both the bank balance and the balance per depositor’s records are reconciled to a correct balance.
Illustration
The cash book of J.Jones showed a balance at the bank of $570 in hand on 31 January 19X1. At the same date, the bank statement balance of J.Jones’ account was $446 overdrawn. The difference was accounted for as follows:
1) Cheques for $1 555 sent to creditors on 30 January were not paid by the bank until 8 February.
2) Cheques amounting to $2 520 paid into the bank on 31 January were not credited by the bank until 1 February.
3) A standing order for a charitable