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Accouting Terms > Bank Reconciliation > Flashcards

Bank Reconciliation Flashcards

1
Q

Direct deposit into the bank as reflected on the B/S

A

Record in CRJ

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2
Q

Stop/debit orders, electronic payments as reflected on the B/S

A

Record in CPJ

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3
Q

Bank charges and interest on overdraft

A

Record in CPJ

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4
Q

Cancellation of cheques (stale, stolen, stopped)

A

Record in CRJ

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5
Q

Interest on favorable bank balance

A

Record in CRJ

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6
Q

Dishonored cheques

A

Record in CPJ

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7
Q

Error in the CPJ

A
  • Amount in the CPJ is greater than the cheque amount : CRJ

- Amount in the CPJ is less than the cheque amount: CPJ

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8
Q

Cheques issued, but not reflected on the B/S

A

Debit the cheque in the bank reconciliation statement

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9
Q

Cheques outstanding on the previous month’s bank recon statement, now reflected on the current B/S

A

No entry

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10
Q

Cheques outstanding on the previous month’s bank recon statement, but still not reflected on current bank statement

A

Debit the cheque in the Bank reconciliation statement

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11
Q

Outstanding deposits

A

Credit in the bank reconciliation statement

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12
Q

Post-dated cheques issued

A

Debit cheque in the bank reconciliation statement

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13
Q

Post-dated cheques received

A

No entry

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14
Q

Errors in the bank statement

A

-Amount incorrectly debited: Credit in BRS
-Amount incorrectly credited:
Debit in BRS

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15
Q

Format of a BRS

A
  • xxxxx Balance as per bank statement
  • Credit outstanding deposits
  • Debit outstanding cheques
  • xxxxxx Balance as per Bank account
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16
Q

Give the term for:

An item shown as an ‘unpaid’ cheque on the Bank Statement will be regarded as a/an…..

A

Dishonored cheque

17
Q

Give the term for:

Permission granted to a third party to automatically receive monthly payments from the current account of a business

A

Debit order

18
Q

The bank has no record of R24000 ever being deposited. This money cannot be found.

  • Explain how this loss would be treated in the books
  • Explain how the owner can prevent a loss of this nature in the future. Provide 3 points.
A

This R24000 would be recorded in the CPJ as loss due to theft as the prudence principle would apply.

Advice:

  • Check documentation on a daily business; receipts must equal deposits
  • Division of duties: Have one person collect the cash and another deposit the cash
  • Make deposits daily and make the bank send an SMS after every deposit.
19
Q

Give a suitable reason for the entry from the BRS of the amount incorrectly debuted, R2500

A
  • The bank had an error shown of another client in the current banking account of the business
  • The bank duplicated an entry on the debit side of the bank statement
20
Q

The office assistant of Manto Traders takes money from the cash register to make payments for business expenses. Explain why this is bad accounting and give advice.

A
  • All cash must be deposited intact to ensure that internal control is not compromised
  • This will lead to abuse and the probability of fraud because there will be no authorization or documentation

Advice:
Stop this practice immediately and use the petty-cash system for daily expenses

21
Q

How would a post-dated cheque be recorded at the end of the year if it was only for the following year?

A
  • Add to Bank if Dr or subtract from bank if bank is overdraft
    -Add to creditors or Trade and other payables
    Reason: The money is still owed and the debt will only be settled when the cheque is due
22
Q

An investigation revealed that the deposit of R20 000 was never deposited at the bank. The money has gone missing and it was decided to write off this amount. How can this problem be avoided in the future.

A
  • Division of duties: The person completing the deposit slip must not be the same person depositing the money at the bank
  • Deposit slips must agree to the total of the receipts and cash slips
  • Request the bank to send an sms each time a deposit is made and check via internet banking that deposits are reflected daily
23
Q

An employee said she had been robbed on her way to the bank with a deposit of R21 500. How can this problem be avoided in the future?

A
  • Use the cash-in-transit service
  • Get two people to do the depositing
  • Ask customers to use EFTs /electronic payment
  • Change depositing routines
24
Q

Deposits are several days old and are still not deposited at the end of the month. What is the problem and how can it be solved?

A

Problem: There is possible rolling of cash
Solution:
- The internal auditor must check that the cashier is depositing cash daily
- Appoint a different person to do the depositing

25
Q

The outstanding deposit from last month appeared on the Bank Statement for this month

A

No Entry

26
Q

A sundry debit entry appeared on the Bank Statement . After being queried, the Bank realized this was a mistake and said they would correct this in this future

A

Credit amount wrongly debited in the Bank Reconciliation statement

27
Q

A sundry credit entry appeared on the Bank Statement . After being queried, the Bank realized this was a mistake and said they would correct this in this future

A

Debit amount wrongly credited in the bank Reconciliation Statement

28
Q

Anna is of the opinion that her debtors’ clerks is are not screening the debtors properly before they start buying on credit from her business . Give two strategies that the debtors’ clerk should follow before allowing the customers to open accounts

A
  • New debtors must provide ID Documents and proof of residence
  • New debtors must provide three credit references which the debtors’ clerk must check for good payment records
  • Debtors must provide proof of income.e.g. Salary slip
29
Q

Give a suitable reason for the following entry from the Bank Reconciliation Statement

Credit amount incorrectly debited, R2500

A
  • The bank had an error shown a cheque of another client in the current banking account of the business
  • The bank duplicated an entry on the debit side of the bank statement
30
Q

A cheque does not appear on this month’s bank statement (as it is stale). How is it recorded and what internal control measure can the business implement to ensure that this will not happen in the future?

A

Stale cheques would be recorded in the CRJ.
Internal control measures:
- Follow up on unpaid cheques and cancel if a problem exists. This may prevent cheques being fraudulently cashed
- Ensure that the correct address is used when cheques are posted and follow up on the payee to verify that it was received
- Minimize the use of cheques by encouraging the use of EFTs and Internet banking

31
Q

The owner wants to change the VAT amount in bad debts from R840 to R4200. Give reasons why you would disagree with him

A
  • It is unethical to forward incorrect information to SARS in order to reduce the amount payable/increase amount receivable
  • It is illegal / fraudulent to provide falsified information to SARS as this will lead to fines or a jail sentence to the offender

Accouting Terms (6 decks)

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