Bank Reconciliations

Question 1

Learn

Answer 1

• A bank reconciliation involves agreeing items per the bank statement to the cashbook (bank ledger) and vice versa. Unreconciled items will either relate to timing differences or errors. (LSBF)

LSBF. ACCA F3 Study Manual 2017/18. London School of Business and Finance, 20170501. VitalBook file.

Question 2

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Answer 2

• Timing differences are summarised as follows: (E4d–E4f)

Balance per bank statement. X

Less: unpresented cheques
(X)

Plus: outstanding lodgements
X

Balance per bank ledger (accounts)
X

(LSBF)

LSBF. ACCA F3 Study Manual 2017/18. London School of Business and Finance, 20170501. VitalBook file.

Question 3

Learn

Answer 3

• Errors must be adjusted through the bank ledger account accordingly and typically entail unrecorded items relating to direct debits, standing orders, bank interest and bank charges as well as incorrectly recorded amounts. (LSBF)

LSBF. ACCA F3 Study Manual 2017/18. London School of Business and Finance, 20170501. VitalBook file.

Question 4

Advantages of preparing bank reconciliations

Answer 4

Ensures that the cashbook is complete, entries recorded accurately

Reduces the risk of fraud

Question 5

A typical bank reconciliation statement

Answer 5

Balance per bank statement x

Less: un presented cheques -x
Add : outstanding lodgements x

Errors made by bank X

Balance per accounts x

Question 6

What is the reconciliation process

Answer 6

1: match items appearing on the bank statement and cash book
2: unmatching items on the statement are used to update the cash book
3: unmatching items on the cash book to create a bank rec statement