Review Eme Flashcards
is a report which compares the bank balance as per company’s accounting records with the balance stated in the bank statement.
Bank Reconciliation Statement
prevent one of the parties (company or the bank) from recording the transaction in the same period as the other party.
Time Lags
by either party in recording transactions
Errors
the balances per bank and per book are separately determined.
Adjusted Method
the bank balance is adjusted to agree with book balance.
Bank to Book Method
the book balance is adjusted to agree with the bank balance.
Book to Bank Method
are amounts already received and recorded by the company, but are not yet recorded by the bank…
Deposit in transit
are checks that have been written and recorded in the company’s Cash account but have not yet cleared the bank account or presented to the bank by the payee.
Outstanding Check
are mistakes made by the bank. Bank errors could include the bank recording an incorrect amount, entering an amount that does not belong on a company’s bank statement, or omitting an amount from a company’s bank statement.
Bank Errors
are fees deducted from the bank statement for the bank’s processing of the checking account activity
Bank service charges
is a check that was not honored by the bank of the person or company writing the check because that account did not have a sufficient balance. As a result, the check is returned without being honored or paid
NSF Check
occur when a company arranges for its bank to handle the reordering of its checks. The cost of the printed checks will automatically be deducted from the company’s checking account.
Check printing charges
will appear on the bank statement when a bank gives a company interest on its account balances. The amount is added to the checking account balance and is automatically on the bank statement. Hence there is no need to adjust the balance per the bank statement. However, the amount of interest earned will increase the balance in the company’s Cash account on its books.
Interest Earned
are assets of a company. When notes come due, the company might ask its
bank to collect the notes receivable. For this service, the bank will charge a fee. The bank will
increase the company’s checking account for the amount it collected (principal and interest)
and will decrease the account by the collection fee it charges. Since these amounts are already
on the bank statement, the company must be certain that the amounts appear on the company’s books in its Cash account
Notes Receivable
in the company’s Cash account result from the company entering an incorrect amount.
entering a transaction that does not belong in the account, or omitting a transaction that
should be in the account. Since the company made these errors, the correction of the error will be either an increase or a decrease to the balance in the Cash account on the company’s books.
Errors
