Bank Reconciliation

Question 1

What is a positive and overdraft balance shown as on a BANK STATEMENT (CR/DR)

Answer 1

A positive balance is shown as a credit

An overdraft is shown as a debit

Question 2

What is a positive and overdraft balance shown as on the CASHBOOK (CR/DR)

Answer 2

A positive balance is shown as a Debit

An overdraft balance is shown as a Credit

Question 3

What causes differences between the cash book balance and the bank statement

Answer 3

Timing Differences
(Outstanding Lodgements and Unpresented Cheques)

The Cash Book has not yet been updated to include items that already appear on the bank statements

Question 4

Unpresented Cheques

Answer 4

Cheques paid out by the business but has not appeared on the bank statement as the cheque needs to be banked and also cleared so the money will go out of the bank at a later date to when this was posted on the Cash Book

Question 5

Outstanding Lodgements

Answer 5

Money paid into the bank but not yet appearing as a receipt on the bank statement