3.6 Bank Reconciliation

Question 1

What are receipts and payments treated as in the business’s book ? ( 2 )

Answer 1

1. Receipts on Debit side
2. Payments on Credit Side

Bank Account

Question 2

What are receipts and payments treated as in bank ? ( 2 )

Answer 2

1. Receipts on Credit side
2. Payments on Debit side

Bank Statement

Question 3

What are the reasons that the balances of the Bank account are not the same as the bank statement ?
( 3 )

Answer 3

1. Items recorded in the business Cash Book but not shown on Bank Statement
   
   • Unpresented Cheque
   • Uncredited Deposits
2. Items recorded in Bank Statement but not recorded in Cash Book
   
   • Credit Transfer
   • Direct Debits
   • Standing Orders
   • Dishonoured Cheque , etc.
3. Errors or omissions made by business or / and bank

Question 4

What are the business deposits regarded as by the bank ?

Answer 4

1. Liabilities

Question 5

What are the accounts open in order to lodge day to day receipts and issue cheques ?

Answer 5

1. Current Account

Question 6

What are credit transfers?

Answer 6

1. Deposits made directly into business bank account

Question 7

What are direct debits ?

Answer 7

1. Instruction to bank to make payments of varying amounts from business bank account

Question 8

What are standing orders ( 2 )

Answer 8

1. Instruction to bank to make fixed payments at regular intervals
2. It was also known as banker’s order

Question 9

Where does the balance of the Bank Overdraft record in the business cash book and at Bank Statement ?

Answer 9

1. Credit side
2. Debit side