workshop stuff and layouts of all statements Flashcards
What is the point of the bank reconciliation statement?
reconcile balance of cash book with bank statement balance
what are unpresented cheques?
cheques drawn but not yet presented for payment through the bank
what are outstanding lodgements?
cash or cheques paid into the bank that have not yet been recorded on the bank statement
what side of the cashbook will outstanding lodgments be on?
Debit
what side of the cashbook will unpresented cheques be found on?
credit
What is the first step of the bank reconciliation statement?
tick all items that appear on both the bank statement and cashbook
what is step 2 of the bank reconciliation statement? (After ticking)
enter into cashbook any items that appear on bank statement but not the cashbook
Also put in previous balance b/d
what is step 3 of the bank reconciliation statement?
balance the cash book and carry down closing balance (use this balance on reconciliation statement)
what is step 4 of the bank reconciliation statement? (Using calculated balance)
start the reconciliation statement by entering balance as per cash book or bank statement
what is step 5 of the bank reconciliation statement? (Unpresented cheque)
unticked credit in the cashbook are unpresented cheques put in reconciliation statement and take them off
what is step 6 of the bank reconciliation statement? (Outstanding lodgements)
unticked receipts (debits) in the cash book are outstanding lodgements enter in the reconsiliation statement and add them
what is step 7 of the bank reconciliation statement? (Final stage of reconciliation statement)
calculate the closing balance on reconciliation statement
should agree with balance on bank statement
What is the calculaiton for the final balances on bank reconciliation statement?
Bank
+ outstanding lodgements
- unpresented cheques
Cash
Or the reverse
What is a direct debit?
where authority is granted by the business for a third party for fixed or variable payments to be made at the request of that third party
What is a standing order?
where a fixed payment is made at regular intervals by the bank on the instructions of the business
How does the bank reconciliation check the accuracy of the cashbook?
will help find errors in the cashbook
What is an example of an error in the cashbook that the bank reconciliation will correct?
where a cheque has been entered incorrectly or missed out all together
How can the bank reconciliation statement check the accuracy of the bank statement?
makes sure all the entries on the bank statement belong to our business
How does the bank reconciliation statement prevent fraud?
uses independent evidence (bank statement to check cash book)
usually done by two or more people to provide a further check
What will a credit in the bank statement be in the cashbook?
a debit
If the cash book has a credit b/d balance what does this mean on the reconciliation statement?
it will be a negative
how can you avoid errors in the accounts?
More then one person does them
Check all statements received
Send regular reminders to trade receivables
Compare cash balances with cash actually held
Use control accounts
Regularly do trial balances
Use computer based accounting
What can any errors found in the accounts be corrected with?
the general journal
What errors will not be shown with a trial balance?
CROPOC
What would be used to correct CROPOC errors?
the general journal not a suspense account
How will the suspense account be treated if it isn’t resolved when the SFP is created?
Debit= current asset
Credit= current liability