1. Chapter 25 Bank Reconciliation Statement

2. Aims To ensure that the difference between the balance in the Bank Statement and the balance in the Cash Book is due principally to the timing difference in entering items To discover errors, if any, in either the banker’s record (Bank Statement) or the depositor’s record (Cash Book)

3. Reasons for timing differences Reason Effect CB to BS BS to CB (a) Unpresented cheques (b) Amount paid into the bank but not yet included in the bank statement CB ＜ BS + - CB ＞ BS - +

4. Reasons for timing differences Reason Effect CB to BS BS to CB (c) Credit transfer (d) Standing order e.g. regular subscription (e) Direct debit e.g. gas CB ＜ BS + - CB ＞ BS - + - +

5. Reasons for timing differences Reason Effect CB to BS BS to CB (f) Bank charges / interest (charged) (g) Returned / dishonoured cheques CB ＞ BS - + - +

6. Reasons for timing differences (a) and (b) in the Cash Book but not in the Balance Statement (c) to (g) in the Bank Statement but not in the Cash Book

7. Types of questions Prepare a Bank Reconciliation Statement without updating the Cash Book

8. Types of questions Prepare a Bank Reconciliation Statement after updating the Cash Book

9. Types of questions Bank overdraft