Term 4

Question 1

What are outstanding cheques

Answer 1

A Cheque that the business has written and given to a business they need to pay; however the business has not yet taken the cheque to the bank to receive payment.

Question 2

What is the purpose of a Bank Reconciliation Statement

Answer 2

To ensure the Business’s bank account in our records equals what the bank says our business has in the bank

Question 3

If the bank statement shows a Dr balance what does this mean as far as the business is concerned

Answer 3

A business is a liability to the bank. Liabilities are Cr. Dr means Liability going down, meaning bank owes the business less money. To the business it means we have taken money out of our account. Dr them is a Cr to us.

Question 4

If you were in business would you rather have a Dr or Cr balance in your Cash at Bank Account? Why?

Answer 4

Bank is and Asset. Increase in Assets (cash) are Debit. Decrease in cash is Credit. Therefore we would prefer a Dr balance in our bank account, however this would be Cr in the banks records.

Question 5

What are some reasons why the bank statement will show that we have paid out money but we have no record of the payment in our books?

Answer 5

• Bank charges - including the cost of cheque books
• Direct Debt
• Dishonored cheques
• Payments which have been made by the bank on the business’s behalf

Question 6

Give 2 reasons why the bank may have recorded a deposit in the bank statement but there is no record of it in our books

Answer 6

• Direct deposit
• Interest earned

Question 7

Give a reason why the bank statement may not show a deposit that we have recorded in our books

Answer 7

Bank deposit made on the 30 of month, after statement was printed and sent, deposits not yet credited.

Question 8

Give one reason why the bank statement may not show the payment of cheques we have made and have recorded in our books

Answer 8

• Unpresented cheques

Question 9

What is a dishonoured cheque

Answer 9

A cheque that has been given as payment however there is no money in the bank to pay that amount. Therefore the cheque is dishonoured or bounced.

Question 10

What is a bank statement

Answer 10

A statement issued by the bank containing a record of the customer’s transactions with the bank

Question 11

What is Bank Reconciliation

Answer 11

The process of comparing the bank’s record of the cash transactions of a business with the bussines’s own record of its cash transaction

Question 12

What is a bank reconciliation statement

Answer 12

A statement prepared to bring into agreement the balances as shown by a bank statement and the balance shown in the bank account of the business, and of explaining any discrepancy between the two balances

Question 13

What is an unpresented cheque

Answer 13

A cheque which has been drawn by a business but which has not yet been presented to the bank for payment - CPJ

Question 14

What are deposits not yet credited

Answer 14

A deposit to a bank account which has not yet been recorded in the bank records - CRJ

Question 15

What do you write in the bank reconciliation if it is credit

Answer 15

Credit Balance as per bank statement
Add deposits not yet credited
Less unpresented cheques
Debit balance as per cash at bank account

Question 16

What do you write in the bank reconciliation if it is debit

Answer 16

Debit balance as per bank statement
Add unpresented cheques
Less deposits not et credited
Credit balance as per cash at bank account

Question 17

The bank statement says the balance in our Bank account at the end of the month is 295 CR. What does this mean to us?

Answer 17

It means that the businesses bank account has a debit balance of $295. Bank is an asset to the business which means that bank increasing is debit. From the bank’s point of view they owe us money when we deposit cash into our bank account. Therefore it is a liability to the bank and therefore credit. In both circumstances this means we have money in our account of $295.

Question 18

Why does the credit column of the Bank Statement have the Cash Receipts Journal figures listed in it?

Answer 18

Cash Receipts are recording increase in bank which is an asset and therefore debited. From the banks point of view in their record it is credit as when we deposit cash into our bank account at the bank we are increasing the bank’s liability, as it represents the money they owe us and therefore credited.

Question 19

Why does the bank not have a record of 278 for 80 and 279 for 30 do you think?

Answer 19

The cheques have not yet been presented by the people who we paid to the bank.

Question 20

In the CRJ when is the bank column used for recording transactions?

Answer 20

Total for the day

Question 21

In the CPJ when is the bank column used for recording transactions?

Answer 21

Total for every cheque