Cash Book and Bank Statement

Cash Book and Bank Statement: Explanation In most businesses, two or three column cash books (with a bank column) are used to record any transactions made through the bank account. Every time cash, checks, money orders, or postal orders (or anything else) are deposited in the bank, the cash book (bank column) is debited. That’s to say, an entry is made in the bank column on the debit side of the c…

Read more

Balance per Cash Book and Bank Statement

Explanation If bank deposits made by an account holder exceed withdrawals: The cash book will show a debit balance (debit side exceeding credit side, resulting in a net asset) The account holder’s bank statement will show a credit balance (credit column exceeding debit column, resulting in a net liability for the bank). Similarly, in the event of an overdraft, the cash book would show a credit bal…

Read more

Bank Reconciliation Process

Bank Reconciliation Process: Explanation Errors can occur in both the recordkeeping systems of both the bank and the depositor. The bank reconciliation process is used to discover these mistakes. Service charges may be levied by the bank for regular or special services. They often appear as a reconciling item because banks notify customers of the amount only through the bank statement. The four ba…

Read more

Bank Reconciliation Statement

Bank Reconciliation Statement: Definition A bank reconciliation statement is prepared by a depositor (account holder) to overcome differences in the balances of the cash book and bank statement. Another definition is that a bank reconciliation statement is the process of accounting for differences between the balance as stated on the bank statement and the balance of cash according to the deposito…

Read more

Treatment of Unpresented Checks in Bank Reconciliation Statement

What Are Unpresented or Outstanding Checks? An unpresented check (or outstanding check) is a check that has been issued or drawn by the depositor but not presented to the bank for payment until the date that the bank statement is issued. Effect of Unpresented Checks on Bank Balance When a check is issued to a creditor or third party, it is immediately recorded in the bank column on the credit side…

Read more

Treatment of Uncleared Checks in Bank Reconciliation Statement

What Are Uncleared, Uncollected, Uncredited Checks? A check that a customer has deposited but that the bank has not yet credited or collected in the customer’s account by the date on which the bank statement is issued is known as an uncleared check. Effect of Uncleared Check on Bank Balance Whenever a check is received from a debtor or third party and deposited into the bank for collection, it is…

Read more

Treatment of Errors and Omissions When Preparing Bank Reconciliation Statement

Errors and Omissions In some cases, discrepancies in the cash book and bank statement may arise from errors committed by the bank or by the person responsible for writing up the cash book. These errors have to be properly rectified. This article shows several examples of such errors and omissions. 1. Errors Resulting in More Bank Balance in the Cash Book A few examples of errors and omissions are…

Read more

Unrecorded Transactions Treatment in Bank Reconciliation Statement

Unrecorded Transactions Depositors (customers) and banks sometimes do not align when a transaction takes place, which leads to a difference between the balances of their respective books. The bank records these transactions in the bank statement but does not alert the depositor, who may only find out when they receive the bank statement. The following items tend to remain unrecorded when a bank st…

Read more