12. Bank Reconcilliations Flashcards
How often should a business reconcile between its cashbook and the bank statement?
At least monthly
Where does the balance in the cash account go?
To the SFP
What are possible timing differences between the cashbook and the bank balance?
Unpresented cheques (written and not yet received) Uncleared lodgement (received by us but not yet credited by the bank)
What types of errors require no adjustment to the company cash book value?
Timing differences and bank errors - left as reconciling items to explain the difference
What items should be made as corrections to the cash book value?
Cashbook errors, Standing orders not recorded in cashbook, bank charges or interest not yet recorded, dishonored cheques not written off
If a business has cash, how is it shown on the SFP?
A debit balance (overdraft is credit balance - liability)
What does being ‘in credit’ with the bank mean?
Having positive cash in the bank (bank owes us)
How do you adjust the bank statement figure for unpresented cheques?
Remove from bank balance
How do you adjust the bank statement figure for uncleared deposits?
Add to bank balance
