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FA Chapter 15 Questions Bank Reconciliations
56 Comments
B
Boikano·
Sir I need help on this one. The cash account shows a balance of $13,620 overdrawn at 30 September 2015. It is later discovered that a standing order of $300 has been entered twice, and that a dishonoured cheque of $1,080 has been debited to the cash account instead of credited. What is the correct balance?
O
Owen·
Hi John, love your videos and if you don't mind, I have a question on Q5. Why don't we have to adjust for the $312 in dishonoured cheques? When the company gets paid with the cheque originally, they debit the cash account, decreasing bank overdraft. However when the cheque is dishonoured, this cash balance is not realised. Shouldn't the bank overdraft increase back to $2,424 instead, since the company originally accounted for the $312 in cash which reduced it to $2,112? If it wasn't realised and the company did not know about it, shouldn't the correct balance be $2,424, the state of which there was no dishonoured cheque in the first place? Thank you!
J
John MoffatTutor·
You are correct as far as the cash account is concerned. However on the bank statement the receipt will never have appeared (because the cheque was dishonoured) and so there is no need to adjust the figure on the bank statement.
D
Duong·
What is the difference between balance at the bank and balance overdrawn Sir?
J
John MoffatTutor·
A balance overdrawn is a negative bank balance.
Have you watched the free lectures on this?
M
Maska·
in Question 4 Why we did not deduct dishonoured cheque is error
J
John MoffatTutor·
The current balance is overdrawn. Correcting for the dishonoured cheque makes it more overdrawn.
A
Abdulaziz·
Good evening sir
I am confused a bit with the first Question. I chose "8,800 balance overdrawn". I would like to ask what is the difference between "balance overdrawn" and "balance at the bank". Why in this question the correct one "balance at the bank"
Thank you so much for help
A
Abdulaziz·
sorry, there is typo.
not "8,800 balance overdrawn" insead "8,808 balance overdrawn"
L
Linet·
balance overdrawn is a negative balance while balance at bank is a positive balance.
R
Roman·
Alhamdullilah!!
100%
Tips:
Do both kits then come to solve Opentution practice questions
You will score 100%
With guarantee
M
Muhammed Saleem·
Sir,
in question 5 they told that bank statement balance is $1920 overdrawn. that means 1920 negative nah?
if it is yes, the answer should be,
statement balance (1920)
+ Lodgements 192
Corrected cash balance (1728)
is my workings correct???
J
John MoffatTutor·
No, your workings are not correct.
The $192 is a cheque drawn by the company and is therefore an unpresented cheque (not a lodgement).
So it makes the overdraft bigger, not smaller.
(You can see the workings for the correct answers by clicking on 'review quiz' after you have submitted your answers)
T
Thu·
Hi sir,
In question 4, it said that the dishourned cheque of 1080 was debited instead of credited so that's mean we have to deduct the cheque from our cash balance. I wonder why we have to add the double of 1080?
Thank you in advance.
J
John MoffatTutor·
When the cheque was first received we debited cash. When it was cancelled we should have credited cash but instead we debited (wrongly).
So we need to credit cash to cancel the wrong debit, and then we need to credit again to put in the correct entry.
Have you watched my free lectures on bank reconciliations?
Z
Zanele·
Good day,
Thank you, got 100% first time. Timeless knowledge, I understand much better now.
Thank you
Zanele South Africa
J
John MoffatTutor·
Well done :-)
P
Pyae Phyo·
Thank you sir, this was a great quiz. Got 80% because I misread some parts of question 3. I'll try my best to be more careful in the future.
T
Tushar Gujral·
dear sir
in question 1 I didn't get the deposited after date why it reduces the overdraft balance can you explain here
J
John MoffatTutor·
I explain this in my free lectures. The overdraft showing on the bank statement will be bigger than it should be because there are deposits (lodgements) that have not yet appeared. When the money does appear in the bank statement the overdraft will reduce.
T
Tawanda·
thank you for this
J
jalalhidayatov84·
Yes we deduct the amount shown on cheque in the cash book balance if we make payment. But if this cheque dishonoured don't we have to remove this amount completely from the cash book balance entering the amount on the credit side? I am confused :(
W
Wasif·
Thank you 100% marks.
J
John MoffatTutor·
Great :-)
(But do make sure you have a Revision Kit from one of the ACCA approved publishers so that you have lots more questions to practice.)
B
bigs·
is the mock exam not enough to prepare for the exam?how is it different from the revision kit from your ACCA approuved publishers ?
J
John MoffatTutor·
No - one mock exam is not enough. You need to practice lots of questions and do more mock exams - the Revision Kit has lots of questions and several mock exams.
Z
zuhal·
Thank you for clarifications.
J
John MoffatTutor·
You are welcome :-)
I
Inara·
In question 4 is written that 300 has been entered twice, so why we reducing 300, not adding?
A
alyyan·
because standing order in this question is a payment so it reduce by 300
J
John MoffatTutor·
And also remember that we are overdrawn. Removing one of the two payments will reduce the overdraft.
J
jchakari·
Very instructive questions
J
John MoffatTutor·
But remember these are only short tests and so buy a Revision Kit from one of the ACCA approved publishers because they are full of practice questions :-)
S
suha12·
Dear sir,
i would like you to clarify the question no 4, in the answer i did not understand why 1080 is multiplied by 2?
J
John MoffatTutor·
The dishonoured cheque was debited but should have been credited. So we credit once to cancel the debit that should not be there, and then credit a second time to put in the credit entry.
Did you watch the free lectures before attempting the test?
S
suha12·
Thank you for the answer.
Yes i have watched the free lectures, just i thought i should credit 1080 once to cancel the debit.
J
John MoffatTutor·
You are welcome :-)
T
tracyjaybee·
Can i just clarify question 5 please? I had credited back the dishonoured cheque to the cash account as it was dishonoured on 28th December, so as at 31st December it was already dishonoured. I assumed that the company was reconciling the account after the 31st December (as is usual practice) when a bank statement is received, so it did not matter that the company was not aware of the dishonoured cheque at the time, it would certainly have been aware of it after, once the statement was received. The cheque would be credited to the account and then debited when it has been dishonoured, so both sides would appear on the bank statement.
Am I over-thinking the answer, or would that not normally be the case? Does this question assume that the transactions will not appear on a bank statement at all?
J
John MoffatTutor·
They are reconciling when they receive the bank statement, and it is only when they get the statement that they will know that the cheque was dishonoured. It is only then that they can correct the cash account, and until they do the cash account balance will not agree with the bank statement. This is what happens in practice also.
R
Rizwan·
thanks alot sir
J
John MoffatTutor·
You are welcome :-)
B
Barugahara·
You're the best Sir.
J
John MoffatTutor·
Thank you :-)
F
feisal5055·
Just wanted to Thank you Sir
God bless you
J
John MoffatTutor·
Thank you for your comment :-)
M
mirrabbi·
Sir,
I can not understand the solution of question no 1...please check your ans and revised it to me
J
John MoffatTutor·
Have you watched the free lectures on bank reconciliations? (Because obviously there is no point in attempting the test if not).
The answer is completely correct!
The original statement in the questionis incorrect because the unpresented cheques increase the overdraft and the deposits credited after date reduce the overdraft.
S
Sukhdeb·
Dear sir, In question 4.The cash account balance shows $ 13620 is an overdrawn balance, thats means its a nagative balance , Then why we calculate as + 13620 -300+1080*2 ?, we should calculate as -13620-300+1080*2 , please clear it to me sir.
S
Sukhdeb·
sorry sir the equation should be -13620+300-1080*2 =- 15480 isn't it sir.
J
John MoffatTutor·
And 15,480 overdrawn is what is shown as the correct answer!! It is irrelevant how you show your workings because nobody will look at them :-)
T
tracizzle·
Hi John, I am confused about Q4 -I don't understand the cheque being credited twice - can you help explain it?
Thanks
J
John MoffatTutor·
You will know from our free lectures that a dishonoured cheque should be credited in the cash account.
Here it had been debited instead of credited, and so to correct it we need to credit once (to cancel the debit) and then credit a second time to make the correct entry.
N
nigar96·
Hello,
i would like to ask regarding question Number 5, Shouldn't we deduct 192? because it is unpresented cheque, isn't it? And also adjustments regarding dishonoured cheque we make only in cash book?
J
John MoffatTutor·
Yes we should deduct 192, and the answer has deducted it. It makes the overdraft bigger.
And yes, adjustments regarding the dishonoured cheque are only made in the cash book. They do not affect the balance on the bank statement.
So the answer and the workings are correct :-)
W
Wasim·
Proud of your work sir.I really love your lectures. It is helping me a lot.Thanks
Have you watched the free lectures on this?
I am confused a bit with the first Question. I chose "8,800 balance overdrawn". I would like to ask what is the difference between "balance overdrawn" and "balance at the bank". Why in this question the correct one "balance at the bank"
Thank you so much for help
not "8,800 balance overdrawn" insead "8,808 balance overdrawn"
100%
Tips:
Do both kits then come to solve Opentution practice questions
You will score 100%
With guarantee
in question 5 they told that bank statement balance is $1920 overdrawn. that means 1920 negative nah?
if it is yes, the answer should be,
statement balance (1920)
+ Lodgements 192
Corrected cash balance (1728)
is my workings correct???
The $192 is a cheque drawn by the company and is therefore an unpresented cheque (not a lodgement).
So it makes the overdraft bigger, not smaller.
(You can see the workings for the correct answers by clicking on 'review quiz' after you have submitted your answers)
In question 4, it said that the dishourned cheque of 1080 was debited instead of credited so that's mean we have to deduct the cheque from our cash balance. I wonder why we have to add the double of 1080?
Thank you in advance.
So we need to credit cash to cancel the wrong debit, and then we need to credit again to put in the correct entry.
Have you watched my free lectures on bank reconciliations?
Thank you, got 100% first time. Timeless knowledge, I understand much better now.
Thank you
Zanele South Africa
in question 1 I didn't get the deposited after date why it reduces the overdraft balance can you explain here
(But do make sure you have a Revision Kit from one of the ACCA approved publishers so that you have lots more questions to practice.)
i would like you to clarify the question no 4, in the answer i did not understand why 1080 is multiplied by 2?
Did you watch the free lectures before attempting the test?
Yes i have watched the free lectures, just i thought i should credit 1080 once to cancel the debit.
Am I over-thinking the answer, or would that not normally be the case? Does this question assume that the transactions will not appear on a bank statement at all?
God bless you
I can not understand the solution of question no 1...please check your ans and revised it to me
The answer is completely correct!
The original statement in the questionis incorrect because the unpresented cheques increase the overdraft and the deposits credited after date reduce the overdraft.
Thanks
Here it had been debited instead of credited, and so to correct it we need to credit once (to cancel the debit) and then credit a second time to make the correct entry.
i would like to ask regarding question Number 5, Shouldn't we deduct 192? because it is unpresented cheque, isn't it? And also adjustments regarding dishonoured cheque we make only in cash book?
And yes, adjustments regarding the dishonoured cheque are only made in the cash book. They do not affect the balance on the bank statement.
So the answer and the workings are correct :-)