Bank Reconciliation Statement Flashcards
What’s the purpose of bank reconciliation statement
To explain the differences between the bank balance shown in the cashbook and the balance on the bank statement
Why can the bank account and the bank statement differ
-the different times at which the same items are recorded
-the business not recording certain items in the cashbook
What is cheque not presented
Cheques that have been paid by the business and e entered on the credit of thr cashbook,which do not appear on the bank statement
What is amounts not yet credited
There are cash and cheques that AHVE been paid into the bank and entered on the debit side of the cashbook,but which do not appear on the bank statement
What is bank reconciliation statement
A document prepared by a business to explain why the updated bank balance in the cash book does not agree with the balance on the bank statement
Advantages of bank reconciliation
-after updating the bank account an accurate bank balance is available
-errors in the bank account or on the bank statement can be identified
-it assist in discovering fraud and embezzlement
-amounts not credited by the bank can be identified
-cheques not yet presented can be identified
State reasons why a business would prepare a bank reconciliation statement
1- to correct any errors in the cashbook
2-to identify errors on the bank statements
3-to update the cash book
4-to assist in discovering fraud
5-identity amounts not credited
6- identity amounts not presented
State possible reasons why a cheque was dishonoured
1-insufficient funds in thr bank account
2-incorrect signature
3-no date
4-no amount
5-no payee
6-words and figures disagree
Explain the difference between direct debit and standing order
-a standing order is when a person instructs thier bank to pay a fixed sum at fixed intervals to another person
-a direct debit is when permission is given for a named person to collect an amount from thier bank while the dates and amounts may vary
