This document outlines the key concepts and steps for preparing a bank reconciliation statement. It defines the functions of a bank reconciliation statement as explaining differences between a cash book balance and bank statement balance. It identifies common causes of differences such as timing delays, errors, uncleared deposits/checks. The document also lists transaction types recorded in cash books and bank statements, and provides templates to record reconciling items and adjustments to calculate an accurate cash book balance.
This document outlines the key concepts and steps for preparing a bank reconciliation statement. It defines the functions of a bank reconciliation statement as explaining differences between a cash book balance and bank statement balance. It identifies common causes of differences such as timing delays, errors, uncleared deposits/checks. The document also lists transaction types recorded in cash books and bank statements, and provides templates to record reconciling items and adjustments to calculate an accurate cash book balance.
This document outlines the key concepts and steps for preparing a bank reconciliation statement. It defines the functions of a bank reconciliation statement as explaining differences between a cash book balance and bank statement balance. It identifies common causes of differences such as timing delays, errors, uncleared deposits/checks. The document also lists transaction types recorded in cash books and bank statements, and provides templates to record reconciling items and adjustments to calculate an accurate cash book balance.
reconciliation statement Explain the causes of differences of the balance of the cash book and balance in the bank statement Update cash book Prepare a bank reconciliation statement Methods of Payment and Receipt Cheques receipt Bank interest income Credit transfer (C/T)
Cheques payment Bank charges Interest charges Standing order (S/O) Direct debit (D/D) or Autopay
Payment by Bank Standing Order is the instruction given by the depositor to the bank to make regular payment with a fixed amount to a specific person automatically from the depositors bank account. Direct debit or autopay is the instruction given by the depositor to his / her creditors bank to collect the money with a variable amount directly from the depositors bank account from time to time.
Record Transactions Cash Book
Receipt / Deposit - Dr. (increase in asset) Payment / Withdrawal - Cr. (decrease in asset) Bank Statement
Deposit - Cr. (increase in liability) Withdrawal - Dr. (decrease in liability) Cheque Post-dated cheque Stale cheque Dishonoured cheque Unpresented cheque Uncredited cheque / Uncredited deposit Dishonoured Cheques Cheques which cannot be converted as money when presented at the bank Possible reasons: Refer to drawer / Post-dated / Insufficient fund
Unpresented Cheques They have not been presented to the bank for money. Stale cheques are cheques not presented for more than six months from the date of issue.
Reasons for Differences Time differences in recording
Errors occurred on the Bank account of the Cash Book and / or the Bank Statement Bank Reconciliation Statement Bank Reconciliation Statement It ensures the users the difference between the balance in bank statement and the balance in cash book can be justified with reasons. Items in Bank Reconciliation Statement Cash Book Bank Statement Dr. Cr. Dr. Cr. Unpresented cheques Uncredited deposits Error on cash book Bank charges Standing order/direct debit Dishonoured cheques Items in Bank Reconciliation Statement Cash Book Bank Statement Dr. Cr. Dr. Cr. Post-dated cheques Stale cheques Credit transfer Error on bank statement Preparation of a bank reconciliation statement Enter ALL adjustments in the bank reconciliation statement
Update cash book as well as prepare a bank reconciliation statement