Theory question 102
Banking and Bank Reconciliation2. (a) Describe: (i) Bank statement; (ii) Bank reconciliation statement. (b) List eight items that cause disagreement between cash book and bank statement balances.
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(a)(i) A bank statement is a copy of the customer's account prepared by the bank for a period, showing deposits (credits), withdrawals and charges (debits) and the running balance.
(ii) A bank reconciliation statement is prepared by the customer at a date to explain the difference between the cash book (bank column) balance and the bank statement balance, listing unpresented cheques, uncredited lodgements and errors.
(b) Any eight: unpresented cheques; uncredited cheques/lodgements; dishonoured cheques; bank charges; bank interest; standing orders; direct debits; credit transfers/direct credits; dividends received by the bank; errors in the cash book; errors by the bank; omissions or duplication of entries.
Describe both documents, then list eight causes.