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In your lecture on bank statement how do you decide which balances should be added or subtracted into the cashbook and which should be in the bank statement when preparing bank reconciliation statement.
Please explain?
It depends on the information in the question.
If there is a mistake in the cash book then we correct the cash book balance.
If there is a mistake in the bank statement then we correct the bank statement.
The bank reconciliation statement explains the difference between the two balances and this is due to unpresented cheques and lodgements not yet credited.
1) Are you saying that when making the bank reconciliation statement do we always adjust only two balances into bank statement: unpresented cheques and lodgements not yet credited?
2) However all the other items will be adjusted in our cashbook?
3) Is it correct that when we prepare the bank reconciliation statement we adjust the balances in both the cashbook in T-account and bank statement (like you did in lecture) in order to reconcile them?
3) When making the bank reconciliation statement how do we know which item to add or less and in what book (whether cashbook or bank statement)?
Thank you for your last answer 🙂
1. The bank reconciliation statement adjusts for unpresented cheques and lodgements not credited in order to reconcile with the cash account. We start with the corrected bank balance is there have been any errors by the bank.
2 see 1
3 That is not what I do in my lecture. We correct any errors in the cash account (and on the bank statement) and then reconcile the two as in point 1.
4. again see 1
My apology first to ask again but I was confused SIR.
1. Cash Account in maintained in general ledgers where we may have mistakes or errors which we need to identify?
2. If there is a mistake in the cash book then we correct the cash book balance which is not part of a bank reconciliation statement?
3. Bank Reconciliation statement is a statement which explains the difference in between the balances of CB differ with BS – which is due to unpresented cheques and lodgements not yet credited.
4. Bank reconciliation statement only adjust the balance as per bank statement by making entries of those items which is not already made by the bank?
5. My question is that do we adjust ONLY unpresented cheques and lodgements not yet credited and errors by bank in the bank reconciliation statement?
6. If there is a mistake in the bank statement then we correct the bank statement when we prepare bank reconciliation statement?
7. I did not understand your answer to this question. When making the entries in the cashbook OR bank reconciliation statement how do we know which item to add or less and in which book whether cashbook or bank reconciliation statement?
1. Yes
2. Yes
3. Yes. It reconciles the two, which means it explains they the two figures are different.
4. Yes (although we are not actually adjusting the balance on the statement – just explaining the reason for it being different from the balance on the cash account)
5. Yes
6 Yes
7. But you have already answered this yourself in your earlier statements 🙂
If it is an error in the cash account then we correct the cash account.
If it is an error on the bank statement then we correct the bank statement balance.
Then to reconcile (to explain the difference) between the bank statement balance and the cash book balance, then in the reconciliation statement we adjust for the cheques and the lodgements not yet appearing on the bank statement (.e. the unpresented cheques and the lodgements not yet credited).
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