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Flashcards in Bank reconciliation statement Deck (6)
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1
Q

Explain two purposes of preparing bank reconciliation.

A

1) To check the cash at bank balance of the business against the balance on the bank statement (main purpose)
2) Check for any errors in the cash at bank account or bank statement
3) Update the cash at bank account
4) Acts as deterrence against fraud

2
Q

Explain why the cash at bank account balance and bank statement balance are different.

A

1) transactions are recorded at different times by the business and the bank
2) errors in recording by the business or the bank.

3
Q

Explain the meaning of the following:

Direct deposit/Credit transfer

A

Bank collected money directly from the business’ customers

4
Q

Explain the meaning of the following:

Direct payment/Direct debits

A

Payments made directly by the bank on behalf of the business

5
Q

Explain the meaning of the following:

Cheques not yet presented

A

The business had issued the cheques but the creditor had not presented the cheque for payment.

6
Q

Explain the meaning of the following:

Cheques not yet credited

A

The business had deposited the cheques with the bank but the bank had not processed the cheque yet.