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Explain the functions of a bank 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
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
Bank Statement
Receipt / Deposit - Dr. (increase in asset) Payment / Withdrawal - Cr. (decrease in asset)
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.
Time differences in recording Errors occurred on the Bank account of the Cash Book and / or the Bank Statement