Bank Reconciliation Statements Flashcards
What is the purpose of a bank reconciliation statement?
The purpose of a bank reconciliations statement is to reconcile the balance shown by the bank statement with that shown by the bank columns of the cash book
What differences may occur between the bank statement and the bank column of the cash book?
Timing differences:
- Unpresented Cheques
- Outstanding lodgements
What differences that appear on the bank statement need to be entered into the cashbook to bring it up to date?
Receipts:
- automated receipts including BACS amounts received by the bank
- Dividend amounts received by the bank
- Bank interest
Payments:
- automated payments made by the bank including standing order and direct debit payment
- Bank charges and interest
- Unpaid Cheques debited by the bank
What is the bank reconciliation statement made up of?
Timing differences
- unpresented Cheques
- outstanding lodgments
What is an ‘opening balance difference’?
An opening balance difference is were the cashbook balance differs from that of the opening bank statement balance
What is the bank reconciliation statement prove off?
It is proof that the bank statement and the cashbook were agreed at a particular date
Define bank reconciliation statement
Bank reconciliation statement forms the link between the balances shown in the bank statement and the cashbook
Define timing differences
Timing differences are the discrepancies between the bank statement and the cashbook that will be corrected over time such as unpresented Cheques and outstanding lodgements
Define unpresented Cheques
Unpresented Cheques are cheques drawn but not yet recorded on the Bank statement
Define outstanding lodgements
Outstanding lodgements are amounts which have been paid into the bank but not get recorded on the Bank statement
Define direct debit/standing order schedules
It is a list of direct debits and standing order payments, kept by a business from which the cashbook is written up as payments fall due
