5 Questions
What is the purpose of bank reconciliation?
Match cash balances on the balance sheet to the corresponding amount on the bank statement
Where are deposits recorded in the bank books?
Credit side
What is the role of the cash column in the cash book?
Shows the available cash
How often does the bank send account statements to its customers?
Every month or at regular intervals
What does reconciling a bank statement involve?
Comparing the account balance reported by the bank to the general ledger
Study Notes
Bank Reconciliation
- The purpose of bank reconciliation is to identify and explain the differences between the company's cash book balance and the bank statement balance.
Bank Records
- Deposits are recorded in the bank's books, specifically in the bank's deposit ledger.
Cash Book
- The cash column in the cash book is used to record all cash transactions, including receipts and payments.
Bank Statements
- Banks typically send account statements to their customers on a regular basis, usually monthly.
Reconciling a Bank Statement
- Reconciling a bank statement involves verifying and explaining the differences between the company's cash book balance and the bank statement balance, by identifying and recording any errors, omissions, or timing differences.
Master the bank reconciliation process with this step-by-step quiz. Test your knowledge on matching cash balances, identifying differences between balance sheet and bank statement, and making necessary accounting adjustments. Ideal for accounting professionals and students.
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