Chapter 9 - Bank reconciliation

Question 1

what are the reasons why the bank may not reconcile

Answer 1

1- unpresented cheques
2- outstanding lodgements
3- unrecorded transactions

Question 2

what are unpresented cheques

Answer 2

when we have written a cheque but is has not been presented o the bank. As son as the cheque is written it will be recorded in our books and reflected in the general ledger as a credit to the cash account. Before the cheque will appear on the bank statement it needs to be posted to our supplier then deposit into heir bank and can take time to clear in the bank systems so the end statement may not reflect this yet

Question 3

what are outstanding lodgements

Answer 3

This is where we have received a cheque and we have paid it into the bank but it has not yet been cleared into our account. We will have posted the transaction to the cash account in our general ledger as we have received the cheque but we may only take our deposits to the bank on certain days so it may take a number of days for a cheque to go through.