COPYRIGHT 2010 BY Mohammad Faizan Farooq

FFQA 1

BANK RECONCILIATION
The Bank Book should be checked with the banks records the bank statement at least once a month. This is called a bank reconciliation.

The purpose of this exercise is to make sure that the organizations own records
agree with the banks records and to pick up any errors made by the bank. This is achieved by taking the closing bank statement balance for a particular date and comparing it to the closing Bank Book balance for the same date. If there is a difference between these two closing balance figures, the difference must be explained. In practice, there will almost always be a difference due to 1. timing delays 2. Other Reasons such as: Money banked by the organization, not yet showing in the banks records Cheques issued by the organization but not yet presented by the supplier Bank charges and interest applied Errors by the bank or in recording entries to the Bank Book

FORMAT
PARTICULARS Cash Book Bank Statement

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Preparing a bank reconciliation has many advantages. They include: Provides a check on accuracy of recordings in the cash book. Highlights any errors. Assists in the day to day cash management. Any differences can be identified quickly.

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Prepared by: Mohammad Faizan Farooq Qadri Attari ACCA (Finalist)

http://www.ffqacca.co.cc

Contact: faizanacca@yahoo.com 0334-3440590

COPYRIGHT 2010 BY Mohammad Faizan Farooq

FFQA 2

RECONCILING ITEMS
It is extremely unlikely that the balance on the ledger account and the balance on the bank statement will agree. This can be due to the following reasons: Cheques issued by the company are immediately entered into the cashbook, but they will not appear on the bank statement until they are presented to the bank. These are called unpresented cheques. Receipts by the business are immediately entered in the cashbook and then banked. This can take a number of days to clear. These are called outstanding lodgements. There may be items in the bank statement that have not been processed through the cash book e.g. BACS transfer, standing orders, direct debits, dishonoured cheques, bank interest and bank charges.

QUESTION 1
On December 31,1997 the Cash book of Karim showed a debit balance (Bank Column) of Rs. 12,500.On this date Balance as per bank statement was Rs. 13,644. The folloawing items of disagreement were discovered: The bank had debited the account of bank charges amounting to Rs. 15 the bank had paid Rs. 100 for insurance premium on behalf of Karim but the item was not recorded in the Cash book. Cheque were deposited totaling Rs. 4,000 but cheques totaling Rs. 3,000 only were cleared. Cheques totaling Rs. 5,000 were issued but cheques totaling Rs. 3,000 only had been presented to the bank. The bank had credited the account of Rs. 50 for intrest.This was not recorded in the Cash Book. A cheque of Rs. 266 issued to Saleem was presented and paid but it had been record in the Cash book as Rs. 257. REQUIRED: Prepare a Bank Reconciliation Statement as on December 31, 1997.

Prepared by: Mohammad Faizan Farooq Qadri Attari ACCA (Finalist)

http://www.ffqacca.co.cc

Contact: faizanacca@yahoo.com 0334-3440590

COPYRIGHT 2010 BY Mohammad Faizan Farooq

FFQA 3

QUESTION 2
On January 31,2005,the Cash Book of Jawad Baluch provides the following information: Debit Balance (bank column) Rs.12,500. Balance as per bank statement on Jan,31,2005 Rs.13,426. Bank deited his charges Rs.115 the item was not recorded in the cash book. Uncleared cheques Rs.1,000. Unpaid cheques Rs.2,000. Dividend on PPL shares credited by bank Rs.50 not recorded in the cash book. A cheque # 1009 issued to Ahmed Hussain Rs.266 was wrongly recorded in the cash book as Rs.257. Required: Prepare a Bank Reconciliation Statement on January 31.

QUESTION 3
Prepare bank reconciliation statement from the following information as on Dec. 31,2003 of Anas Bros: Balance as per cash book 35,000. Balance as per Bank Statement 26,000. Dishonored cheque of Shahid and Company 21,500. Uncleared cheques 11,950. Cash deposited on Dec.31, 2003 not shown at bank statement 10,000. Collection of notes receivable not recorded in Cash Book 6,000. Deposite by a customer not recorded in Cash Book 6,000. Unpresented cheques 21,950. Collection charges debited by Bank but not recorded in cash book 30. Interest credited by bank but not recorded in cash book 280. Required: Prepare a Bank Reconciliation Statement on January 31.

Prepared by: Mohammad Faizan Farooq Qadri Attari ACCA (Finalist)

http://www.ffqacca.co.cc

Contact: faizanacca@yahoo.com 0334-3440590

COPYRIGHT 2010 BY Mohammad Faizan Farooq

FFQA 4

QUESTION 4
The Cash transactions and cash balances of Memon company for April,2003 are summarized bellow: On April 30,cash Book showed balance of Rs. 7,059.12 and balance as per Bank statement was Rs. 6,678.67. Cash receipt of Rs. 2,187.03 on April 30 were not record by Bank. The following memoranda accompained the Bank statement: Debit for service charges Rs. 7.56. Debit for a cheque of Haroon marked NSF for Rs. 149. Credit for Rs. 1,452 representing the proceeds for non-intrest bearing a note collected by Bank for ABC Company.The note was for Rs. 1,464,the bank had deducted collection charges of Rs. 12. The following cheque had been issued but were still not presented for payment. No. 348 for Rs. 302.40 No. 351 for Rs. 124.32 No. 358 for Rs. 85.30 Required : Prepare Bank Reconciliation statement as of April 30

QUESTION 5
The June 30 balance in the Cash Book is Rs. 16,500;the bank statement balance for the same date shows a balance of Rs. 8,500. Following are the differences found between the two records of the Simple Company. Uncleared cheques for Rs. 2,500. Unpaid cheques for Rs. 1,000. A cheque for Rs. 2,500 issued to a supplier which was paid by the bank but was not recorded in Cash Book. A cheque for Rs. 5,300 was drawn to settle an A/Payable but it was wrongly entered in Cash Book as for Rs. 3,500. A cheque for Rs. 2,200 was deposited in bank,but the bank incorrectly recrded it as for Rs. 200. Enclosed with the bank statement was a Dr. note for service charges Rs. 200. REQUIRED Prepare the June 30 Bank Reconciliation Statement for the Simple Co. showing corrected balances.

Prepared by: Mohammad Faizan Farooq Qadri Attari ACCA (Finalist)

http://www.ffqacca.co.cc

Contact: faizanacca@yahoo.com 0334-3440590

COPYRIGHT 2010 BY Mohammad Faizan Farooq

FFQA 5

QUESTION 6
A study of the cash records and the bank statement of Maqsood Abbasi and Co. for the month of September,1998 revealed the following information: Balances as per Cash Book (30.9.1998) Rs. 30,000. Balances as per Bank Statement (30.9.1998)Rs. 42,350. September 30 deposit not shown in B/Statement Rs. 16,660. Cheque issued but not presented for payment Rs. 21,110. Cheque deposited by a customer directly in firm's a/c and not recorded in Cash Book Rs. 10,000. Collection charges debited by bank not recorded in Cash Book Rs. 100. Credit given by Bank not recorded in Cash Book Rs. 500. A customer's cheque has been dishonoured by the bank Rs. 2,500. REQUIRED: Prepare a Bank Reconciliation Statement for the month ended September 30, 1998

Question # 8
Laraib is preparing his bank reconciliation at 31 May 2005. His bank statement shows a balance of $228 cash at the bank. The balance on the bank account in his general ledger is $113 (credit). He has noted the following reasons for the difference: Cheque number 958602 was incorrectly recorded in Laraibs cashbook as $760. The cheque was correctly debited on the bank statement on 2 May as $670. The bank debited bank charges of $428 on 4 May. A customers cheque for $320 was returned by Laraibs bank in May as the customer had insufficient funds in his account. Laraib has not recorded the return of the cheque in his records. The bank has incorrectly credited Laraibs account with interest of $220. This is interest on a deposit account held by Laraib personally. The bank had not corrected the error by 31 May. A lodgment of $850 entered in Laraibs cashbook on 31 May was credited on the bank statement on 3 June. Five cheques have not yet been presented at the bank. These are $1,629 in total. Cheque number 956784 $625 was lost in the post and was cancelled. Laraib has not recorded the cancellation of the cheque. Required: Prepare a reconciliation of the bank statement balance to the corrected general ledger balance.

Prepared by: Mohammad Faizan Farooq Qadri Attari ACCA (Finalist)

http://www.ffqacca.co.cc

Contact: faizanacca@yahoo.com 0334-3440590

COPYRIGHT 2010 BY Mohammad Faizan Farooq

FFQA 6

Multiple Choice Questions

QUESTION 1
Margaret checked her bank statement to the bank account in her nominal ledger and found the following reasons for the difference: i some cheques have not been lodged by her suppliers ii the bank credited a personal lodgement to her business account in error iii the bank debited fees on her account Which of the differences require an entry in the bank account in the nominal ledger? Ai B ii C iii D ii and iii

QUESTION 2
At 30 April 2008 the balance on the bank account in Jims general ledger showed that he had $685 cash at the bank. When he carried out his bank reconciliation, he found that he had omitted bank charges of $722 for the year to 30 April 2008. What bank balance should be included on Jims opening trial balance at 1 May 2008? A $685 debit B $685 credit C $37 debit D $37 credit

QUESTION 3
Jane is preparing her bank reconciliation. The bank balance in her general ledger is $422 credit. The only items which need to be dealt with are: (i) a cheque for $822 issued to a supplier which has not yet appeared on the bank statement; (ii) interest received of $153 which was credited by the bank, but not recorded by Jane. What is the closing balance on Janes bank statement? A $269 overdrawn B $1,091 overdrawn C $553 cash at bank D $1,397 cash at bank

QUESTION 4
Linda found the following when carrying out her bank reconciliation: (i) a cheque for $7,523 has not been presented at the bank (ii) a cheque for $560 has been incorrectly recorded as $650 in Lindas ledger Which of these items will require an entry in Lindas general ledger? A (i) only B (ii) only C both (i) and (ii) D neither (i) nor (ii)

Prepared by: Mohammad Faizan Farooq Qadri Attari ACCA (Finalist)

http://www.ffqacca.co.cc

Contact: faizanacca@yahoo.com 0334-3440590

COPYRIGHT 2010 BY Mohammad Faizan Farooq

FFQA 7

QUESTION 5
Elaine is preparing her bank reconciliation. She has noted the following: (i) the bank has levied charges on her account (ii) a cheque payable to S. Wright has not been presented at the bank Which of the above errors require an entry in the bank account in her general ledger? A both (i) and (ii) B (i) only C neither (i) nor (ii) D (ii) only

Prepared by: Mohammad Faizan Farooq Qadri Attari ACCA (Finalist)

http://www.ffqacca.co.cc

Contact: faizanacca@yahoo.com 0334-3440590