Bank Reconciliation Statement

Question 1

Outstanding Lodgements

Answer 1

Bank deposits that have been recorded in the cash book but have not yet been processed by the bank

Question 2

Direct Debit

Answer 2

Where authority is granted by the business to a third party for fixed or variable payments to be made at the request of that third party

Question 3

Standing Order

Answer 3

Where a fixed payment is made at regular intervals by the bank on the instructions of the business

Question 4

Unpresented Cheques

Answer 4

Cheques that have been drawn and entered in the cash book, but have not yet been processed by the bank

Question 5

What is the Importance of the Bank Reconciliation Statement

Answer 5

🔸It enables any errors in the cash book to be corrected
🔸it enables any missing entries in the cash book to be accounted for
🔸it enables any out-of-days Cheques to be identified and cancelled in the cash book

Question 6

Cancelled Cheque

Answer 6

A cheque drawn by the business and subsequently cancelled before payment

Question 7

Contra Entry

Answer 7

A cancellation of a debit balance with a credit balance in different books of account

Question 8

Returned Cheque

Answer 8

A cheque that has been paid into the bank, but not honoured by the drawers bank

Question 9

Benefits of Control Accounts

Answer 9

ACCURACY
a balanced control account verifies the arithmetical accuracy of the subsidiary ledger.

PREVENTION OF FRAUD

MANAGEMENT INFORMATION

PREPARATION OF FINANCIAL STATEMENTS