IGCSE Accounting

Advantages of Bank Reconciliation

 After updating the bank account an accurate bank balance is available.

 Errors in the bank account or on the bank statement can be identified.
 It assists in discovering fraud and embezzlement.
 Amounts not credited by the bank can be identified.
 Cheques not yet back into the bank account presented can be identified.
 Any stale Cheques (these are usually those which are over six months old, which will
not be met by the bank) can be identified and written.

Revision checklist

 The purpose of bank reconciliation is to explain the differences between the bank
balance shown in the cash book and the balance on the bank statement.
 Most of the differences between the balances are caused by differences in the time at
which items are recorded and because some items cannot be recorded in the cash book
until the bank statement is received.
 The cash book should be updated by entering those items which appear on the bank
statement but not in the cash book
 The bank reconciliation statement shows the balance adjusted for amounts not yet
credited, cheques not yet presented and any bank errors. The final figure should agree
with the balance shown in the bank account in the cash book.