Professional Documents
Culture Documents
Abm Fabm2 Module 7 Lesson 1 Bank Reconciliation
Abm Fabm2 Module 7 Lesson 1 Bank Reconciliation
Fundamentals of
Accountancy,
Business and
Management 2
Quarter 2 – Module 7.1:
Bank Reconciliation Statement
\
Writer:
NESSA B. DIMALANTA
Teacher-II BACOLOR HIGH SCHOOL
Editors:
JANE P. VALENCIA, ED. D., EPS Mathematics
CHAIRMAN
BETHEL GRACE M. GUIAO- Teacher-III
VIENNAH MARIE M. BUSTOS Teacher-II
What I Need to Know
This module was designed and written with you in mind. It is here to help you master
the Bank Reconciliation Statement. The scope of this module permits it to be used in
many different learning situations. The language used recognizes the diverse vocabulary
level of students. The lessons are arranged to follow the standard sequence of the
course. But the order in which you read them can be changed to correspond with the
textbook you are now using.
The module has one lesson, namely:
Lesson 1: Describe and identify the common reconciling items of a bank
reconciliation statement and its nature
What I Know
1
C. Deposit in Transits D. NSF Checks
6. A cash or check deposit recorded by the company but not recorded by the bank
that deposited after the cut-off.
A. Credit Memo C. Deposit in Transits
B. Debit Memo D. NSF Checks
7. These are items deducted made by the bank but not yet recorded by the
depositor.
A. Credit Memo C. Deposit in Transits
B. Debit Memo D. Outstanding Checks
8. Which is not a bank reconciling items?
A. Bank errors C. NSF Checks
B. Deposit in Transits D. Outstanding Checks
9. Which is not a book reconciling items?
A. Credit Memo C. NSF Checks
B. Debit Memo D. Outstanding Checks
10. Which is a book reconciling items?
A. Bank Errors C. Auto Debit
B. Deposit in Transit D. Outstanding Checks
11. Which of the following is not an example of a Credit Memo?
A. Bank Service Charge
B. A collection made by the bank
C. Interest Income earned by the account holder
D. Proceed from loan added by the bank
12. Which of the following is an example of a Debit Memo?
A. Automatic payments of bills on behalf of the account holder
B. A collection made by the bank on behalf of the account holder
C. Deposit in Transit
D. Outstanding Checks
13. Why is bank reconciliation being prepared?
A. To gather data from the company’s record and bank statement
B. It explains the difference between the reposted cash balance per book and bank
C. Provide information for adjusting journal entries
D. For reporting
14. Items that are erroneously recorded by the company.
A. Book errors C. Collection by the banks
B. Bank errors D. Payments of Loan
15. Items that are correctly recorded by the company but erroneously recorded by
the bank
A. Book errors B. Bank errors
2
C. Collection by the banks D. Payments of Loan
What’s In
Write down what you think the best answer there is. Write your answer on a
separate sheet of paper.
What’s New
Read the situation carefully, then reread it again until you understand and
find the right answer. Write your answer on a separate sheet of paper.
Read the following transactions and identify the cause based on time difference or errors
made by the business firm/bank. Put a check sign (√) for the correct cause.
TRANSACTIONS TIME ERRORS made by
DIFFERENCE the company/bank
1. Bank Fees deducted to the company’s
current account by the bank.
2. Checks deposited into the bank but not
yet cleared by the bank.
3. Interest added by the bank but not
recorded in the company’s cash book.
4. Checks amounting to P4,000 given to
ABC Company but recorded as P400 in
the cash book.
5. Checks issued to customers for payment
but not presented in the bank
3
What is It
4
Reconciling Items per Book
PER BANK
Unadjusted Bank Balance P XX
Add: Deposit in Transit (DIT) XX
Less: Outstanding Checks (OC) (XX)
Add/Less: Bank errors XX
Adjusted Bank Balance P XX
Credit Memo- are additions made by the bank to the account of the depositor. Examples
are bank collections and interest income.
Bank service charges - are fees such as check printing and processing that the bank
deducts from the depositor.
NSF (no sufficient fund) check - is a check that was dishonored and returned by the
bank to the person or company writing the check because that account did not have
enough funds.
Book Errors - are items erroneously recorded by the company. For example, the
company deposit P20,000 but recorded it P2,000.
Outstanding Checks - checks issued by the company to payees but not yet encashed
with the bank or cleared by the bank. For example, on April 27, 2019, AKO Company
issued and recorded a P1,000 check in favor of IKAW Company. April 28, 2019, IKAW
Company picked -up the check and was deposited on May 1, 2019, and cleared by the
bank on May 2, 2019. In this scenario, the check deducted to the book cash balance in
April; however, deduction in the bank was made in May. Therefore, comparing the
balance of the company's book and bank records shows that bank records have a higher
balance than the company's book. Which of the two records is correct? The company's
accounting record is correct that aims to determine the amount of cash it can use, and
it was already promised to the payee the amount of P1,000 on April 28, 2019.
Bank Errors - are items erroneously recorded by the bank. For example, a check deposit
of P10,000 was recorded P1,000.
5
What’s More
Activity 1
Search the corresponding word to identify what is asked below. Write your answer on a
separate sheet of paper.
1. What are checks that have been issued by the company but have not yet
presented to the bank?
2. What check received then recorded by the company but not deposited in the bank
due to the cut-off time?
3. An example of this fee is a check printing deducted to the company's bank
account. What kind of check is it?
4. What is the amount added to the company's bank account made by the bank?
5. What is the amount deducted to the company's bank account made by the bank?
I P K Q R L V X P U H A Z Q E R L O J C
T U S B E X M R W N S U B N F I V M I W
J T Q X L B K W D U A W X K S M E E L I
N P R G E U F P H Y E S I C I U W M I D
X B L C F T T F H L A R B V C B N T F F
J Z S X T C D D M L P I K M H E K I W G
S K C E H C G N I D N A T S T U O D G N
E G R A H C E C I V R E S K N A B E V V
L T I S N A R T N I T I S O P E D R O D
D E B I T M E M O V A F D F A C F C W N
6
Fill in the blank of the correct answer by answering the crossword puzzle
provided above. Write your answer on a separate sheet of paper.
Down:
Across:
1._______ ex. payment of loans
4. _________ex. interest income
2. NSF is no sufficient ________
5. time difference and ________
3. Deposit in ___________
6. compared ________ reciprocal
account
Activity 2 WHAT AM I?
Identify what reconciling item of the book or bank the following independent
transaction. Write your answer on a separate sheet of paper.
7
8. The bank collected P40,000 from the customer.
9. P10,000 monthly payment for the PLDT bill directly
charge out of the bank account of ABC Company
10. ABC company bank account was deducted a
monthly P6,000 for the payment of its company car
loan.
1. Debit memos are items added by the bank but have not been added by the book as
of the cut-off date.
2. Credit memos are items that have been deducted by the bank but have not been
deducted per book.
3. Debit memos are collections from receivables by the bank on behalf of the company
and proceeds from loans directly added by the bank to the account of the depositor.
4. One of the internal control features in every company is a monthly bank reconciliation
in which it is created to report that there is no discrepancy between the cash balance
per book records and the cash balance per bank records.
5. After all, adjustments have been made. Reciprocal accounts should have the same
balance.
6. Bank reconciliation statement is prepared to reconcile the difference between cash
book and bank balance.
7. When a company has two bank account, only one bank reconciliation is prepared for
all the accounts.
Answer the question to test your understanding. Write your answer on a separate
sheet of paper.
______________________________________________________________________________
8
______________________________________________________________________________
4. What are the bank reconciling items? Explain by giving an example on one of the
items?
______________________________________________________________________________
______________________________________________________________________________
5. What are the common causes of discrepancy between cash balance per book and
bank? Explain each.
______________________________________________________________________________
______________________________________________________________________________
What I Can Do
Find the match of items in Column A to Column B. Write your answer on a separate
sheet of paper.
Column A Column B
Assessment
WORD BOX. Choose from the box the missing word on the sentence below.
9
1. Outstanding Checks are checks been issued by the company to payee but not yet
___________cleared by the bank.
2. Deposit in Transit often happens where deposits were mailed to the bank or checks
were cleared after ___________.
3. Bank reconciliation statement is a ___________ report that is prepared to reconcile
two reciprocal accounts.
4. NSF stands for no ___________ funds.
5. Debit Memo is ___________ made by the bank to the account of the depositor.
6. ___________ are items erroneously recorded by the company.
7. A business that has two or more bank accounts will have ___________ bank
reconciliations statements.
8. ___________ method is a method that adjusts both balances per bank and balances
per book to determine the correct cash balance separately.
9. Credit Memo is ___________ made by the bank to the account of the depositor.
10. According to Merriam-webster dictionary, ___________ means “to cause people or
groups to become friendly again after an argument or disagreement.”
11. The common causes of discrepancy seen in bank reconciliation are ___________ and
errors.
12. These reciprocal accounts should have ___________ balance after adjustment have
made.
13. Once a bank statement was received, it should be ___________ and compared with
the business accounting records.
14. A bank reconciliation statement is prepared by the ___________ holder.
15. A bank reconciliation statement is mainly prepared for reconciling the ___________
between the bank balance shown by the cash book and bank passbook.
Additional Activities
MATCHING TYPE: From the items in the box, classify the items as to reconciling
items per bank or per book. Indicate whether the adjustment is an addition (+) or
deduction (-) using the related symbol. Write your answer on a separate sheet of paper.
10
11
What’s More What I Have Learned
Assessment 2 1. Bank reconciliation statement is a monthly
1. transit report that is prepared to reconcile two
2. Credit reciprocal accounts which is the cash
memo balance per book records and the cash per
3. two bank balance to show that there is no
4. debit memo discrepancy.
5. funds 2. 1. Adjusted Method 2. Bank to Book
6. errors Method 3. Book to Bank Method
3. Book e reconciling items are credit memos,
debit memos and book errors. Student
answers may vary in giving example.
4. Bank reconciling items are deposit in
transit, outstanding checks and bank
errors. Student answers may vary in giving
example.
5. Timing difference and Errors. Timing
difference prevent either the company or
the bank from recording the transaction in
the same period. Errors are erroneously
recorded transaction made either by the
company or the bank
What I Can Do Assessment Additional
1. E 1. encash Activity
2. D 2. cut-off
Box A
3. C 3. monthly
4. B 4. sufficient 1. Deposit in Transit
5. A 5. deductions 2. Outstanding checks
6. book errors 3. Bank errors
7. separate
Box B
8. adjusted
9. additions 1. Credit Memo (CM)
10.reconcile 2. Direct Memo (DM)
11.time difference 3. No Sufficient Funds
12.same 4. Bank Service Charge
13.reviewed
5. Collections of the
14.account
15.difference
bank
6. Interest Income
Answer Key
12
What I Know What’s IN What’s New
1. B 1. The bank statement 1. Time
2. B shows the beginning Difference
3. B balance, additions, 2. Error
4. C deductions, and the 3. Time
5. A balance at the end of the
Difference
6. C period. This statement
is issued by the bank to
4. Time
7. B
8. C all its depositors and is Difference
9. D usually done on a 5. Time
10.C monthly basis Difference
11.A 2. The bank statement
12.A helps the depositor in
13.B documenting and
14.A monitoring the
15.B movements on his bank
account.
3. Student may answer a.
File the statement b.
Throw/Discard/Leave
anywhere b. Review c.
Check and compare
with records.
What’s More What’s More What’s More Activity
Activity 1 Assessment 1 2
1. Outstanding 1. False 1. NSF(No Sufficient Fund
Checks 2. False 2. Book Error
2. Deposit in 3. False 3. Interest Income (CM)
Transit 4. True 4. Bank Service Charge
3. Bank Service 5. True (DM)
5. Deposit in Transit
Charge 6. True
6. Outstanding Checks
4. Credit Memo 7. False 7. Book Errors
5. Debit Memo 8. True 8. Collection by the bank
9. False (CM)
10. True 9. Auto Debit (DM)
10. Payment of Loan (DM)
References
By:
13
Development Team of the Module
Writers: Nessa B. Dimalanta
Editors: Jane P. Valencia, Ed. D., EPS - Mathematics
Reviewers: Bethel Grace M. Guiao/Viennah Marie M. Bustos
Illustrator: Nessa B. Dimalanta
Layout Artist: Nessa B. Dimalanta
Management Team:
ZENIA G. MOSTOLES, EdD, CESO V, Schools Division Superintendent
LEONARDO C. CANLAS, EdD, CESE. Asst. Schools Division Superintendent
ROWENA T. QUIAMBAO, CESE, Asst. Schools Division Superintendent
CELIA R. LACNALALE, PhD, CID Chief
JANE P. VALENCIA, EdD, Education Program Supervisor, Mathematics
JUNE E. CUNANAN, Education Program Supervisor/ Language Editor
RUBY M. JIMENEZ, PhD., Education Program Supervisor, LRMDS
14