Executive Accounts Question:
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What are important things to be remembered while preparing a bank reconciliation statement?


While preparing a bank reconciliation statement following important points need to be remembered:
► Bank Reconciliation Statement is prepared either by starting with the Bank pass book balance or Cash book balance.
► If the balance of the Cash book is taken as a starting point then Cash book balance is to be adjusted in accordance with the entries passed in the Bank pass book and vice versa. For example: If the balance is taken as per the Cash book then the following items will be added:
► Cheques issued but not presented for payment;
► Amount credited in Passbook but not in Cash book;
► Deposits made in the bank directly;
► Wrong credits given by bank;
► Interest credited in the Passbook.

The following items will be subtracted:
► Cheques deposited but not cleared;
► Interest/Bank Charges debited by bank
► Direct payments made by bank not entered in Cash book
► Cheques dishonoured not recorded in cash book
► Wrong debits given by bank
► If it is prepared with the Bank balance as per the bank passbook, then the above procedure will be reversed i.e the items will be added to the pass book which were deducted from the cash book balance and those items will be deducted from the bank pass book balance which were added to the cash book balance.

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