Bank recon

Question 1

What do all credit customers receive at the end of each month to see the amount that they owe to the business?

Answer 1

Statement of Account

Question 2

What does the bank send out to its clients at the end of the month which is a list of all the transactions of the business with the bank?

Answer 2

Bank statement

Question 3

When will the bank statement have a credit balance?

Answer 3

If a business has money in the bank

Question 4

When will the bank statement have a debit balance?

Answer 4

If a business has an overdraft bank account

Question 5

Define bank reconciliation

Answer 5

To reconcile (make two bank balances the same) the bank balance on the bank statement with the bank balance of the cash book

Question 6

Give four reasons why it is important to reconcile the bank statement with the bank account

Answer 6

• Helps discover errors early at bank and in books of business
• Helps prevent fraud at the bank and in finance department of business
• Bank reconciliation explains the difference between the bank and the bank account of the business
• Forms part of the internal control process for business

Question 7

What do we use to bring our cash book bank entries up to date?

Answer 7

Supplementary cash book

Question 8

What do we use to update the bank statement?

Answer 8

Bank reconciliation statement

Question 9

Name three entries that will appear on the bank statement but not yet in the bank account column of the cash book

Answer 9

• Bank charges for the month
• Debit orders/stop orders paid from the bank account
• EFT payments made without sending a proof of payment to the business

Question 10

Give the four steps that must be followed when doing bank reconciliation

Answer 10

1. Compare the bank statement with the bank column of the cash book
2. Update the cash book
3. Balance the cash book
4. Draw up the bank reconciliation statement