Chapter 14

Bank Reconciliation Statements

Explaining the difference between the cash book and bank statement balances — with an interactive exercise.

Bank reconciliation statements explain the difference between the cash book balance and the bank statement balance.

Differences arise from unpresented cheques (paid but not yet cleared), uncredited deposits (banked but not yet on the statement), and items on the statement not yet in the cash book (bank charges, interest, direct debits). First update the cash book, then reconcile the remaining timing differences.

Remember

  • Update the cash book first (charges, interest, standing orders).
  • Then adjust for unpresented cheques and uncredited deposits.

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