Bank Reconciliation. Chapter 10

Question 1

Define Bank Reconciliation.

Answer 1

To reconcile the bank balance on the bank statement with the bank bank balance of the cash book.

Question 2

What does reconcile mean?

Answer 2

To make two bank balances the same.

Question 3

Give four reasons why it is important to reconcile the bank statement with the bank account.

Answer 3

• It forms part of the internal control process for the business.
• It helps to discover errors early at the bank and in the books of the business.
• It helps to prevent fraud at the bank and in the finance department of the business.
• A bank reconciliation explains differences between the bank and the bank account of the business.

Question 4

When we compare, we compare the:

Answer 4

-Debit side of bank in the cash book with the credit side of the bank statement.
-Credit side of bank in the cash book with the debit side of the bank statement.
Done at the end of each month.

Question 5

What do we use to bring our cash book bank entries up to date?

Answer 5

Supplementary cash book.

Question 6

What do we use to update the bank statement?

Answer 6

Bank reconciliation.

Question 7

Name three entries that will appear on the bank statement but not yet in the bank account column of the cash book?

Answer 7

• Bank charges for the month.
• Debit orders or Stop orders paid from the bank account.
• EFT payments made without sending Proof Of Payment to the business.

Question 8

Name two entries that will appear in the bank column of the cash book but not yet on the Bank Statement.

Answer 8

• EFT Payments made but no reflecting on the bank statement

- Cash deposited into the bank account.