ChPter 2 Flashcards
What is a bank reconciliation statement
A statement reconciling the bank statement balance on a. Given date to the correct, adjusted cash book balance on the same dates
What is a traditional manual bank statement reconciliation
The bookkeeper records all cash recepts and payments in a cash book, and is sent a bank statement monthly … differences investigated and resolved
How does a digital system reconcile bank statements
The same way manual, cash book and bank statement compared
What can the differences be between the bank statement and cash book
Unpresented cheques
Outstanding lodgements
Timing differences
Cash book has not been updated with bank trans ( DD, SO, interest) etc
What is outstanding lodge ment
Cheques that have been received and recorded on debit side of cash book but not yet appear on bank (money paid in)
What is timing differences for bank reconciliation
Cheque has been sent or recieved so recorded in the cash book but cheque hasn’t cleared in bank yet
What to do with unbalanced bank statement when doing reconciliation
Include in the cash book those missing as show on bank statement
Why would the opening balance on the cash book, the same as the bank statement?
There were no unpresented cheques or outstanding lodgements at the end of the previous period
The bank stament shows the balance form the bank view, the cash book..
From the business view
What does it mean if the bank is in credit
There is a debit balance in the business records
What happens if bank is overdrawn
There is a credit balance in the business records, the business will be using the banks overdraft facility
Overdraft debit or credit
Debit in bank
Credit in cash book
