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Hello sir,
Please I need clarification of treatment of bank reconciliation at the end of accounting period. Under current assets of the SOFP, is it the balance as per bank statement that must be stated as ‘cash at bank’ of balance as per adjusted cash book.
For e.g. Balance as per adjusted cashbook is $10,000 and as per bank say $15,000. There is and unpresented cheque of $5,000. Which figure should be shown in SOFP as cash at bank.
The two balances at accounting year end used to confused me please. I need clear explanations. Thanks in anticipating of your response soon.
The figure we show in the SOFP is always the corrected balance in the cash account.
The balance on the bank statement is likely to be different (because of unpresented cheques and lodgements not yet appearing) and the bank reconciliation statement is prepared simply as a way of checking that the balance on the cash account is correct.
I do suggest that you watch my free lectures on this. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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