MODULE 2 Flashcards
a report that is prepared for the purpose of bringing the balances of
(a) cash per records
(b) per bank statement agreement
bank reconciliation statement
what balances does bank reconciliation statement bringing
cash per records
per bank statement agreement
2 common causes of discrepancy
time lag
errors in the entries
prevent one parties from recording the transaction to the same period as the other party
time lag
either party made this mistakes in recording transaction
errors in the entries
cash balances in the accounting records as the end of the current month
balance per books, end
the cash balance as of the end of the current month in the financial reports
balance per bank statement, end.
are additions made by the bank to the depositor’s bank account but not yet recorded by the depositor
credit memos
- collections made by the bank on behalf of the depositor
- interest income earned by the depositor
- proceeds from loan directly credited or added the bank to the depositor’s account
credit memos
are deductions made by the bank to the depositors bank acc but not yet recorded by the depositor
debit memos
a. bank service charges
b. no sufficient bank checks (NSF) or drawn against insufficient funds check (DAIF)
c. automatic debits
d. payment of loans
debit memos
no sufficient bank checks (NSF) or…
draw against insufficient funds check (DAIF)
errors committed by the depositor
book errors
deposits already made but not yet received by the bank, or received by the bank but not yet credited to the depositor’s bank acc
deposits in transit
checks drawn and released to payers but are not yet encashed with the bank
outstanding checks
exclude certified checks and stale checks
outstanding checks
errors committed by the bank
bank errors
correction of erros
inverse relationship
direct relationship
to correct an overstated credit, you need make a debit
to correct an overstated debit, you need make a credit
inverse relationship
to correct an understated credit, you need to make a credit
to correct an understated debit, you need to make a debit
direct relationship
form of bank reconciliation statement
LEFT:
balance per books, end.
Add: credit memos (CM)
Less: Debit memos (DM)
Add/less: Bank errors
ADJUSTED BALANCE
RIGHT:
Bal. per statement end
Add: Deposits in transit (DIT)
Less: Outstanding checks (OC)
Add/less: Bank errors
ADJUSTED BALANCE
IDENTIFYING ______ ENSURES THE _______ OF FINANCIAL RECORDS
DISCREPANCIES
ACCURACY
___________ THE BANK STATEMENT WITH THE COMPANY’S RECORDS HELP CATCH ______, _____, _____ IN THE ___________
RECONCEILING
ERRORS, MISSIONS, INACURRACIES
ACCOUNTING SYSTEM
basic internal controls
bank reconciliation
imprest system
check disbursement voucher
petty cash voucher
require that all cash receipts should be deposited intact and all cash disbursement should be made through checks
imprest system
used to provide reasonable assurance that each check written is properly authorized
check disbursement voucher
use to provide reasonable assurance that all disbursements are properly authorized
petty cash voucher
