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  • Bank Reconciliation

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    Zejkeara Imperial
    98 tayangan3 halaman
    Bank reconciliation is a report that compares a company's bank balance in its accounting records to the balance in its bank statement. Differences may exist due to timing - some transactions are recorded by the bank or company at different times. Reconciliation identifies reconciling items that cause differences, like outstanding checks or deposits. It detects errors in the company or bank's records beyond normal timing differences. Preparing reconciliations helps protect cash, identify errors, and monitor cash flows.

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    Bank reconciliation is a report that compares a company's bank balance in its accounting records to the balance in its bank statement. Differences may exist due to timing - some transactions are recorded by the bank or company at different times. Reconciliation identifies reconciling items that cause differences, like outstanding checks or deposits. It detects errors in the company or bank's records beyond normal timing differences. Preparing reconciliations helps protect cash, identify errors, and monitor cash flows.

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    98 tayangan3 halaman

    Bank Reconciliation

    Diunggah oleh

    Zejkeara Imperial
    Bank reconciliation is a report that compares a company's bank balance in its accounting records to the balance in its bank statement. Differences may exist due to timing - some transactions are recorded by the bank or company at different times. Reconciliation identifies reconciling items that cause differences, like outstanding checks or deposits. It detects errors in the company or bank's records beyond normal timing differences. Preparing reconciliations helps protect cash, identify errors, and monitor cash flows.

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    © All Rights Reserved
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    dari 3

    Bank Reconciliation

    Bank reconciliation statement is a report which


    compares the bank balance as per company's
    accounting records with the balance stated in the
    bank statement.
    It is normal for a company's bank balance as per
    accounting records to differ from the balance as per
    bank statement due to timing differences. Certain
    transactions are recorded by the entity that are
    updated in the bank's system after a certain time lag.
    Likewise, some transactions are accounted for in the
    bank's financial system before the company
    incorporates them into its own accounting system.
    Such timing differences appear as reconciling items in
    the Bank Reconciliation Statement.
    The purpose of preparing a Bank Reconciliation
    Statement is to detect any discrepancies between the
    accounting records of the entity and the bank besides
    those due to normal timing differences. Such
    discrepancies might exist due to an error on the part
    of the company or the bank.

    Importance of Bank Reconciliation


     Preparation of bank reconciliation helps in the
    identification of errors in the accounting
    records of the company or the bank.
     Cash is the most vulnerable asset of an entity.
    Bank reconciliations provide the necessary
    control mechanism to help protect the
    valuable resource through uncovering
    irregularities such as unauthorized bank
    withdrawals. However, in order for the control
    process to work effectively, it is necessary to
    segregate the duties of persons responsible
    for accounting and authorizing of bank
    transactions and those responsible for
    preparing and monitoring bank reconciliation
    statements.
     If the bank balance appearing in the
    accounting records can be confirmed to be
    correct by comparing it with the bank
    statement balance, it provides added comfort
    that the bank transactions have been
    recorded correctly in the company records.
     Monthly preparation of bank reconciliation
    assists in the regular monitoring of cash flows
    of a business.
    Preparing a Bank Reconciliation
    Statement
    Following is a sample Bank Reconciliation Statement:
    ABC LTD

    Bank Reconciliation Statement as at 31 December 2011


    Balance as per corrected Cash Book 1 xxx
    Add:
    Unpresented Cheques 2 xxx
    Less:
    Deposits in Transit 3 (xxx)
    Errors in Bank Statement 4 (xxx)

    Balance as per Bank Statement xxx

    1. Balance as per corrected Cash Book:


    This is the starting point of a bank reconciliation. Corrected bank balance is calculated by adjusting the
    cash book ledger balance for transactions that are recorded by the bank but not by the entity as shown
    below:
    Balance as per Cash Book xxx
    Add:
    Direct Credits 5 xxx
    Interest on Deposit 6 xxx
    Less:
    Bank Charges 7 (xxx)
    Direct Debits 8 (xxx)
    Standing Order 9 (xxx)
    Errors in Cash Book 10 (xxx)

    Balance as per corrected Cash Book xxx

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