Chapter 11: Bank Reconciliations

Question 1

Define BACS and CHAPS payments.

Answer 1

BACS - Bankers Automated Clearing Services is an easy way to transfer money. It takes between 3 and 5 days to complete.

CHAPS - Clearing House Automated Payment System is a same day transfer that is usually charged.

Question 2

Define uncleared lodgements.

Answer 2

An uncleared lodgement is a cheque paid into the bank but has not yet cleared the system. The cash book is up to date.

Question 3

Define unpresented cheques.

Answer 3

An unpresented chèque is a cheque written but not yet taken to the bank by the recipient. The cash book is up to date.

Question 4

Define unrecorded transactions.

Answer 4

Unrecorded transactions are transactions that appear on the bank statement that the business has not updated the cash book for

Question 5

What are the three steps in the bank reconciliation process?

Answer 5

Step 1: Agree the opening balances

Step 2: Agree the items on the statement and update the cash book with any unrecorded transactions

Step 3: Any remaining items in the cash book are un represented cheques or uncleared lodgements