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Learning Objectives

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. BANK RECONCILIATION STATEMENT.

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Learning Objectives

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  1. 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

  2. BANK RECONCILIATION STATEMENT

  3. 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

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

  5. 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)

  6. Cheque • Post-dated cheque • Stale cheque • Dishonoured cheque • Unpresented cheque • Uncredited cheque / Uncredited deposit

  7. Dishonoured Cheques • Cheques which cannot be converted as money when presented at the bank • Possible reasons: Refer to drawer / Post-dated / Insufficient fund

  8. 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.

  9. Reasons for Differences • Time differences in recording • Errors occurred on the Bank account of the Cash Book and / or the Bank Statement

  10. Bank Reconciliation Statement It is a statement to highlight and explain the differences between the balance of bank statement and the balance of the bank account of the cash book of a business.

  11. 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.

  12. Items in Bank Reconciliation Statement

  13. Items in Bank Reconciliation Statement

  14. 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

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