Bank Reconciliation

Question 1

What’s bank reconciliation?

Answer 1

Ensuring the bank balance shown in the cash book is correct. This is done by comparing the balance with the information in the bank statement.

Question 2

What’s the purpose of bank reconciliation?

Answer 2

Facilitating the location of errors and omissions in the cash book, will help the figure in being correct.

Question 3

Features of a bank statement:

Answer 3

• Records of receipts into and payments out of the bank account.
• Receipts are credited & Payments are debited.
• Debit balance brought down is an overdraft.
• Credit balance brought down is a positive balance.

Question 4

Features of a cash book:

Answer 4

• A financial journal that contains all cash receipts and disbursements (including bank deposits and withdrawals).
• Receipts are debited & Payments are credited.
• Can keep track of small cash purchases.

Question 5

Items that are in the cashbook but not the bank statement:

Answer 5

• Outstanding checks / Lodgements.
• Unpresented checks / Lodgements.
• Recorded checks going missing.
• Book keeping errors.

Question 6

What’s the ratio for gross profit?

Answer 6

Gross profit ratio = (gross profit / net sales x 100)