Question

Question List some examples of timing differences, and for each difference, determine if it would affect the book side of the reconciliation or the bank side of the reconciliation.

Answer 1

Step 1: Definition of the bank reconciliation statement

It is a statement that shows the difference between the bank account balance and the company’s books.

Step 2: Some examples of timing differences

Check deposits:

When a business writes a check, it immediately deducts the amount in its check book and Cash account. The bank, however, does not subtract the check from the company’s account until the bank pays the check a few days later. It would affect the bank account balance.

Deposits in transit:

When a company deposits cash in its account, it immediately adds the cash receipt to the chequebook and Cash account. The bank, however, may take a day or two to add deposits to the company’s balance. It would affect the book side of reconciliation.

Electronic Fund Transfer:

EFT cash payments and EFT cash receipts are often recorded by the bank before a company learns of them. It would affect book side reconciliation.

 

 

Answer

Examples of bank reconciliation statements are check deposits, EFT payments, and cash deposits.