Learning Objectives

Explain the functions of a bank

reconciliation statement
Explain the causes of differences of the
balance of the cash book and balance in the
bank statement
Update cash book
Prepare a bank reconciliation statement
Methods of Payment and Receipt
Cheques receipt
Bank interest income
Credit transfer (C/T)


Cheques payment
Bank charges
Interest charges
Standing order (S/O)
Direct debit (D/D) or
Autopay

Payment by Bank
Standing Order is the
instruction given by
the depositor to the
bank to make regular
payment with a fixed
amount to a specific
person automatically
from the depositors
bank account.
Direct debit or autopay is
the instruction given by
the depositor to his / her
creditors bank to collect
the money with a variable
amount directly from the
depositors bank account
from time to time.

Record Transactions
Cash Book

Receipt / Deposit
- Dr.
(increase in asset)
Payment / Withdrawal
- Cr.
(decrease in asset)
Bank Statement

Deposit
- Cr.
(increase in liability)
Withdrawal
- Dr.
(decrease in liability)
Cheque
Post-dated cheque
Stale cheque
Dishonoured cheque
Unpresented cheque
Uncredited cheque / Uncredited deposit
Dishonoured Cheques
Cheques which cannot be converted as money
when presented at the bank
Possible reasons: Refer to drawer / Post-dated /
Insufficient fund

Unpresented Cheques
They have not been presented to the bank for
money.
Stale cheques are cheques not presented for more
than six months from the date of issue.

Reasons for Differences
Time differences in recording

Errors occurred on the Bank account of the
Cash Book and / or the Bank Statement
Bank Reconciliation Statement
Bank Reconciliation Statement
It ensures the users the difference between
the balance in bank statement and the
balance in cash book can be justified with
reasons.
Items in Bank Reconciliation Statement
Cash Book Bank
Statement
Dr. Cr. Dr. Cr.
Unpresented cheques
Uncredited deposits
Error on cash book
Bank charges
Standing order/direct debit
Dishonoured cheques
Items in Bank Reconciliation Statement
Cash Book Bank
Statement
Dr. Cr. Dr. Cr.
Post-dated cheques
Stale cheques
Credit transfer
Error on bank statement
Preparation of a bank
reconciliation statement
Enter ALL adjustments in the bank
reconciliation statement


Update cash book as well as prepare a bank
reconciliation statement