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12 Cards in this Set
- Front
- Back
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what’s the purpose of bank reconciliation |
this is to explain any difference between the balance in the cash book of a business and the balance on the bank statements by the bank |
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What is a bank statement |
this is a copy of the customer’s account in the books of the bank |
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When will the bank statement have a credit balance |
This is the amount owed by the bank to the customer when money is taken out of the back |
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What happens when the bank statement has a debit balance |
When the money is taken out of the bank, the customers account will be devoted as this reduced the amount owed from the bank to the customer |
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When will the bank statement have a credit balance |
This is the amount owed by the bank to the customer |
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Who’s perspective is the back account prepared |
Of the business, therefore items will be recorded on the opposite side to that on which they appeared on the bank statement |
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Debit balance in the bank account of cash book? |
Money paid into the bank is debited , as this is the amount the bank owed the business |
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credit balance in bank account of cash book |
When the business is having an overdraft, the bank account will show a credit balance as this is the amount the business owed the bank |
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What’s a bank account |
this is a record of transactions as they affect the business |
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why bank account and bank statement may differ |
1) different times at which the items were recorded 2) the business didn’t record certain items in the cash book |
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why bank account and bank statement may differ |
1) different times at which the items were recorded 2) the business didn’t record certain items in the cash book |
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Timing differences occur due to |
1) cheque not yet presented: these are the cheques that have been paid by the business and entered on credit of the cashbook, but do not appear on the bank statement. This many be because the cheque is still in the banking system and has not yet been deducted from the business’s account 2) amounts not yet credited. These are cash and cheques that have been paid into the bank and entered on the debit side of the cash book, but which don’t appear in the bank statement. This is because it takes time for payments to be processed by banks |
