BANK

RECONCILIATION
 BANK RECONCILIATION

• In bookkeeping, a bank reconciliation statement is a process

that explains the difference on a specified date between
the bank balance shown in an organization's bank statement,
as supplied by the bank and the corresponding amount shown
in the organization's own accounting records.
 RECONCILAIATION

• The term reconciliation refers to a process that compares two

sets of records (usually the balances of two accounts,
 DIFFERENCES AND THE NEED
FOR A RECONCILIATION
• Items recorded in the cash at bank account are not (yet) shown
in the bank statement.
• Items in the bank statement that have not been recorded in the
cash at bank account.
• Errors by the bank (these are quite rare but do happen).
• Errors in the cash book.
 ITEMS RECORDED IN THE CASH
AT BANK ACCOUNT ARE NOT (YET)
SHOWN IN THE BANK STATEMENT.

• Cheques received from customers, not have been processed yet

by the bank “outstanding lodgements.”(uncleared cheque)
• Cheques paid to suppliers, may not yet have been presented to the
bank for payment “unpresented cheques.”
• cheques have been presented for payment , not have processed
the deduction form the business’s account yet.
 ITEMS IN THE BANK STATEMENT
THAT HAVE NOT BEEN RECORDED
IN THE CASH AT BANK ACCOUNT.

• bank charges;
• bank interest on an overdrawn balance; a payment from a customer
that has been rejected by the bank (for example, the customer’s
cheque has been dishonoured).
• a bank transfer where a payment has been made directly into the
business’s account;
• a bank might make a mistake either crediting or debiting an
incorrect amount into an account (these are rare but they do
happen).
 ERRORS

• The bank might sometimes make an error.

• An error has been made in the cash book.
FORMAT
PRACTICE QUESTION
SOLUTION
 BANK RECONCILIATIONS AND
OVERDRAWN BALANCES
• Money held by the bank in a bank account for a customer is
money that belongs to the customer. For the bank, deposits are
therefore liabilities and an account is said to be in credit when
there is money in it.
• If a bank allows an overdraft to a customer, the customer owes
the bank. The amount of the overdraft is a form of receivable
for the bank, and is an asset. To the bank, an overdraft balance
on a customer’s account is therefore a debit balance (= asset).
FORMAT
PRACTICE QUESTION
SOLUTION
PRACTICE QUESTION
SOLUTION
PRACTICE QUESTION
PQ OF INVENTORY
PQ OF INVENTORY
SOLUTION