UNIT 3C MY CLUB1 BANK RECONCILIATION An organisation’s Bank Account balance often differs from the balance shown on the Bank Statement prepared by the bank. Why?

UNIT 3C MY CLUB2 Cheques paid to creditors who may hold on to them before taking them to the bank days later Deposits made into the bank on or near the date the statement is prepared ie too late to be included If so, they will be included in the next statement THINGS THE BANK MAY NOT KNOW YET

UNIT 3C MY CLUB3 THINGS THE ORGANISATION MAY NOT KNOW YET Standing orders and direct debits can be forgotten about but the bank always remembers them How much Bank Charges are - until the bank tells them in the statement Deposits made straight through the bank rather than to the organisation (BGCs)

UNIT 3C MY CLUB4 THINGS TO REMEMBER The Bank Statement and the Bank Account are a mirror image of each other ie payments made are recorded in the credit column of the bank account but the bank shows them in the debit column of the statement receipts are shown in the debit column of the bank account but appear in the credit column of the bank statement

UNIT 3C MY CLUB5 HOW TO RECONCILE THE TWO Step 1 Find the differences by ticking off all the matching items in the bank statement and bank account and circle the items for which there is no match Step 2 Update the bank account using the circled items in the statement Step 3 Prepare a bank reconciliation statement using the circled items in the bank account

UNIT 3C MY CLUB6 STEP 1 BANK STATEMENT Treasurer Snappy Camera Club Date Description Dr Cr Balance 1Ap Op Bal ” Deposit ” ” DD Bet Ph ” Deposit ” ” Bank Chgs Finding the Differences

UNIT 3C MY CLUB7 STEP 2 30 Apr DD Better Photo Apr Bank Charges Updating the Bank Account

UNIT 3C MY CLUB8 STEP 3 Snappy Camera Club BANK RECONCILIATION STATEMENT AS AT 30 APRIL…. Bank Statement Balance£2340 Add Items deposited not yet shown: Subscriptions Less Unpresented Cheques: Secretary’s Expenses 305 Advertising Corrected Bank Account Balance The Bank Reconciliation Statement

UNIT 3C MY CLUB9 KEY WORDS a standing order a bank giro credit a direct debit bank charges a method of payment for a regular sum to the same person, the same time every month similar to a standing order but the payee instructs the bank to deduct the amount from your account every month a payment directly into your bank account the amount you pay the bank for setting up standing orders and direct debits.