BANK RECONCILIATION

Question 1

Is Money placed in a
bank or other financial institution for safekeeping. Interest is modest, and has no maturity date

Answer 1

Savings Account

Question 2

otherwise called Current Account, interest is lower than that of a savings account,can make withdrawals through checks
and is evidenced by a checkbook

Answer 2

Checking Account

Question 3

otherwise called Certificate of Deposit, higher but fixed interest rate, evidenced by a certificate of time deposit. Has a holding period or maturity date with penalty if fund is withdrawn
before maturity date

Answer 3

Time Deposit

Question 4

A monthly report provided by the
bank to the account holder of the
checking account reflecting the
transactions that affected his/her
bank account

Answer 4

Bank Statement

Question 5

What are samples of Debit Transactions?

Answer 5

Bank Service Charge & NSF

Question 6

Monthly fee charged by the bank for its services (Ex. cost of printing
checks writing funds to other
locations and other fees)

Answer 6

Bank Service Charge

Question 7

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

Answer 7

NSF or (Not Sufficient Fund)

Question 8

What are samples of credit transactions?

Answer 8

Collection of cash proceeds from notes receivable
Interest Income earned by the deposit

Question 9

Schedule prepared to bring the
depositor’s cash balance and the related bank’s cash balance into agreement.

Answer 9

Bank Reconciliation Statement

Question 10

Common Causes of Discrepancy

Answer 10

TIme lags that prevent both parties to record the transaction in the same periods
Errors by either party in recording

Question 11

What are the methods of preparing the bank reconciliation?

Answer 11

Unadjusted Bank to Book Balance
Unadjusted Book to Bank Balance
Adjusted Balance Method

Question 12

adjusts the unadjusted balance per bank to arrive at the unadjusted balance per book.
(adjusted bank-unadjusted book)

Answer 12

Unadjusted Bank to Book Balance

Question 13

Adjusts the unadjusted balance per book to arrive at the unadjusted balance per bank
(adjusted book- unadjusted bank)

Answer 13

Unadjusted Book to Bank Balance

Question 14

Adjusts both balances (balance per bank and per book) to the corrected cash balance that will be presented in the balance sheet.

Answer 14

Adjusted Balance Method

Question 15

What are the 3 book reconciling items?

Answer 15

Bank Credits/Credit Memo
Bank Debits/Debit Memo
Book Errors

Question 16

Deposits made by the bank in the company’s account but not yet reflected in the book or company’s records. Collections made by
the bank, proceeds of bank loan, interest income.

Answer 16

Bank Credits/Credit Memo

Question 17

Charges made by bank against the company account but not yet reflected in the company’s records.
Such as No Sufficient Fund or NSF checks, bank charges for checkbook printing or other services and final tax.

Answer 17

Bank Debits / Debit Memo

Question 18

Items erroneously recorded by the company

Answer 18

Book Errors

Question 19

3 Bank Reconciling Items

Answer 19

Deposit in Transit
Outstanding checks
Bank Errors

Question 20

These are deposits made prior to the cut-off period which are already recorded in the company’s books but not yet recorded in the bank records.

Answer 20

Deposit in Transit

Question 21

These are checks issued by the company but not yet paid by
the bank because they have not been presented to the bank for payment.

Answer 21

Outstanding Checks

Question 22

Items erroneously recorded by the bank

Answer 22

Bank Errors