Bank Reconciliation

Question 1

Are monthly fee charged by the bank for its services.

Answer 1

Bank service charge/service charge

Question 2

Banks also use a debit memorandum when a deposited check from a customer “bounces” because of insufficient fund.

Answer 2

Not Sufficient Fund or NSF

Question 3

Other term for NSF or Not Sufficient Fund.

Answer 3

DAIF (Drawn Against Insufficient Fund)
DAUD (Drawn Against Uncleared Deposits)

Question 4

Sample of credit transaction

Answer 4

Collection (Cash proceeds from notes receivables)
Interest income (earned by deposits)

Question 5

It is marked to specify an instruction about the way it is to be redeemed.
A common instruction is to specify that it must be deposited directly into the account of the payee.
Usually done by writing parallel lines on the upper left portion of the check.

Answer 5

Cross check

Question 6

A cheque that a bank will not accept and exchange for money or payment because it was written more than a certain number of months ago.

Answer 6

Stale Check

Question 7

In the Philippines, a check becomes stale if it exceeds how many months from the date of the check?

Answer 7

6 months

Question 8

A report which compares the bank balance as per the company’s accounting records with the balance stated in the bank statement.

Answer 8

Bank reconciliation

Question 9

Are the results of timing differences wherein transactions are recorded on the banks and the company’s accounting books at different dates.

Answer 9

Reconciling items

Question 10

Two common causes of the discrepancy in figures are:

Answer 10

Time lags (Prevent one of the parties from recording the transaction in the same period as the other party.
Errors (by either party in recording)

Question 11

Three methods of preparing bank reconciliation statement

Answer 11

1. Adjusted method (The balances per book and bank are separately determined)
2. Book to Bank Method (The book balance is adjusted to agree with the bank)
3. Bank to Book Method (The bank balance is adjusted to agree with the book balance)

Question 12

Are amounts already received and recorded by the company, but are not yet recorded by the bank?

Answer 12

Deposits in transit (Is on the company’s books but isn’t on the bank statement)

Question 13

Checks that have been written and recorded in the company’s cash account but have not yet cleared the bank account or presented to the bank by the payee.

Answer 13

Outstanding checks (Checks written during the last few days of the month plus a few older checks are likely to be among this)

Question 14

Mistakes made by the bank, may include recording an incorrect amount, entering an amount that does not belong to the company’s account, or omitting an amount from a company’s bank statement.

Answer 14

Bank Errors

Question 15

Are fees deducted from the bank statement for the bank’s processing of the checking account activity?

Answer 15

Bank service charge

Question 16

Check that was not honored by the bank of the person or company because of insufficient balance.

Answer 16

NSF (Not Sufficient Fund)

Question 17

Occurs when a company arranges for its bank to handle the reordering of its checks. The cost of the printed checks will be automatically deducted from the company’s checking account.

Answer 17

Check printing charges

Question 18

Appears on the bank statement when a bank gives a company interest on its account balances.

Answer 18

Interest earned