Explain bank reconciliation. How does a bank draft differ from an ordinary cheque?
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This process helps identify any discrepancies between the two records, such as outstanding checks, deposits in transit, bank fees, or errors in recording transactions. Show more…
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In your own words, explain what a bank reconciliation is. For just this part, imagine the person you are explaining this to has never taken an accounting class and that his or her banking experience is strictly limited to managing his or her personal checking account. Feel free to discuss or summarize the different sections of a bank reconciliation if you feel this would be helpful. Try to capture the essence of why bank reconciliations are important and how they are done. Part II: (1) Why don't we make journal entries for bank errors? (2) Why do we bother including deposits in transit and outstanding checks? Won't they just "work themselves out" the following month? (3) Why is the Adjusted balance on the bank reconciliation twice?
Akash M.
The Cash Book of Suresh showed a debit balance of Rs. 10,000 as on 31st July 2015. Prepare Bank Reconciliation statement from the following information: (i) Cheques of Rs. 350 paid into the bank, but the bank credited Rs. 530 by mistake. (ii) The total of the Receipts side of the Cash Book of Rs. 2,500 was written on the next page as Rs. 4,200. (iii) The cheque issued to Rajan for Rs. 2,000 was cancelled on 31.07.15 against a fresh cheque issued on the same date. The entry for the cancellation and issue of a new cheque was made in the Cash Book, while no entry was made in the Pass Book. (iv) The bank paid an insurance premium of Rs. 2,000, but it was recorded as Rs. 200 only in the Cash Book. (v) One outgoing cheque of Rs. 700 was recorded twice in the Cash Book.
Dominador T.
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