F3- Chapter 12

Bank reconciliation statement

Upon completion of this chapter you will be able to:

• describe the purpose of bank reconciliations

• identify the main differences between the cash book and the bank statement

• identify the bank balance to be reported in the final accounts

• Correct cash book errors or omissions

• prepare bank reconciliation statements

• derive bank statement and cash book balances from given information.

Cash book bank account – Bank statement – Bank reconciliation statement.

Differences between the bank statement and the cash book

When attempting to reconcile the cash book with the bank statement, two types of difference
may be found:

• Unrecorded items

• Timing differences.
What are the unrecorded items?

What are the timing differences?

What can be done for errors?

Steps to prepare bank reconciliation

1. Check the bank statement with the cash book

2. Identify the reasons for the differences
3. Prepare Bank reconciliation

Bank statement Cash book

Test questions