Excelsior High School
Bank Reconciliation Statement
Handout
Bank Reconciliation Statement
A statement showing a comparison between the cashbook balances and the balance as per the
bank statement.
Items that may be found on the bank statement but not in the cash book
Entries in a bank statement DR CR Definition
Standing order Consists of an instruction to a bank ( by the
✔
drawer) to pay a fixed amount to a named
individual or company (the payee) at a fixed date
each month
Direct debit This is variation of the standing order service.
✔
Customer will complete and sign a form giving
permission to withdraw amount from their account
at a regualar intervals. E.g mortgage
This is done instead of instructing the bank.
Credit transfer Is a method of transferring money from one bank
✔
account to another without the use of cheques.
Services Charges These are charges that are sometimes levied by the
✔
bank to cover their cost incurred in operation the
account.
Bank interest earned The bank pay a small amount of interest on an
✔
account depending on the size of the balance.
Bank charges These are charges due to the bank in relation to the
✔
services that they offers.
Dishonoured cheques/returned Cheques deposited to our a/c but which are
✔
cheques worthless, as there may not be enough cash in the
drawer’s bank account.
, Items that may be in cash book but not on the bank statement
Unpresented Cheques These are cheques paid out and recorded by the
business but have not been received by the bank for
payment. Unpresented cheques will therefore be
found on the payment side of the cashbook but not on
the bank statement.
Late Lodgements These are cheques received and recorded in the
cashbook by the business which have not been
lodged, or were lodged late, so were not entered on
the bank statement.
✔ Starting with the updated cash book balances
Steps involved in preparing a bank reconciliation statement
1. Compare the bank statement with the cashbook
2. Identify all entries that are not common to both
3. Use items found in the bank statement but not in the cashbook to update the cashbook.
4. Use items found in the cashbook but not in the bank statement to reconcile the updated
cashbook balance with the balance as per bank statement.
Bank Reconciliation Statement
Handout
Bank Reconciliation Statement
A statement showing a comparison between the cashbook balances and the balance as per the
bank statement.
Items that may be found on the bank statement but not in the cash book
Entries in a bank statement DR CR Definition
Standing order Consists of an instruction to a bank ( by the
✔
drawer) to pay a fixed amount to a named
individual or company (the payee) at a fixed date
each month
Direct debit This is variation of the standing order service.
✔
Customer will complete and sign a form giving
permission to withdraw amount from their account
at a regualar intervals. E.g mortgage
This is done instead of instructing the bank.
Credit transfer Is a method of transferring money from one bank
✔
account to another without the use of cheques.
Services Charges These are charges that are sometimes levied by the
✔
bank to cover their cost incurred in operation the
account.
Bank interest earned The bank pay a small amount of interest on an
✔
account depending on the size of the balance.
Bank charges These are charges due to the bank in relation to the
✔
services that they offers.
Dishonoured cheques/returned Cheques deposited to our a/c but which are
✔
cheques worthless, as there may not be enough cash in the
drawer’s bank account.
, Items that may be in cash book but not on the bank statement
Unpresented Cheques These are cheques paid out and recorded by the
business but have not been received by the bank for
payment. Unpresented cheques will therefore be
found on the payment side of the cashbook but not on
the bank statement.
Late Lodgements These are cheques received and recorded in the
cashbook by the business which have not been
lodged, or were lodged late, so were not entered on
the bank statement.
✔ Starting with the updated cash book balances
Steps involved in preparing a bank reconciliation statement
1. Compare the bank statement with the cashbook
2. Identify all entries that are not common to both
3. Use items found in the bank statement but not in the cashbook to update the cashbook.
4. Use items found in the cashbook but not in the bank statement to reconcile the updated
cashbook balance with the balance as per bank statement.
