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FABM 2
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Nature of Bank Reconciliation and Types of
Bank Accounts

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Objectives
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Describe the nature of bank reconciliation
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statement

2 Identify the types of bank accounts normally

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3 maintained by a business.

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NATURE OF 6
2 BANK 7
RECONCILIATION
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 BANK STATEMENT

A monthly statement being sent by the bank to the

depositor showing the amount of deposits,
withdrawals, bank charges and the running balance
of his account.
 BANK RECONCILIATION
is a monthly report that is prepared to reconcile two
reciprocal accounts: the cash balance per book records
and the cash balance per bank balance to show that there
is no discrepancy. These reciprocal accounts should have
the same balance after an adjustment has made.

process of comparing the information in a business

accounting records of cash-in-bank account with the
corresponding information on a bank statement
0BANK RECONCILIATION PROCESS 5
1 A bank reconciliation consists of two columns: book
balance and bank balance
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2 Adjustments are done by adding unrecorded deposits
or subtracting checks issued by the business.
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3 The reconciliation is complete when the adjusted
column equals the unadjusted column. 8
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0BANK RECONCILIATION PROCESS 5
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 RECONCILING ITEMS
These are the items that need adjustments to make
the bank statement balance and book balance equal

Reconciling items must be analyzed to determine

whether they are included in the balance per bank or
the balance per book
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TYPES OF
2 BANKS
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 CASH
Cash is the most delicate asset possessed by the
business.

Cash is an item that is susceptible to temptation of

being subject to fraud, theft and robbery.

Keeping cash in vault within the premise of the

business is very risky.
0 TYPES OF BANK ACCOUNTS 5
1 SAVINGS ACCOUNT
is a bank account that earns interest and is intended to
encourage earns savings.
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2 The simplest bank account is the savings account. The business
deposits money in the bank for safekeeping. The account earns
minimal interest and may have a minimum balance requirement.
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Some savings accounts are linked with passbooks. On the other
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hand. some savings accounts come with an ATM card.

ATM cards are used for making transactions in Automated Teller

Machines. Some ATM cards also functions as debit cards.
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0 TYPES OF BANK ACCOUNTS 5
1 CHECKING OR CURRENT ACCOUNT
is a bank account used to deposit and withdraw money by visiting the
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bank branch, using an ATM, internet banking, or by writing a cheque.

2 A checking account is like a savings account with an added feature - the

depositor can issue bank checks. Bank check is an acceptable form of
payment. It allows depositors to pay large sums using one sheet of paper
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instead of carrying currencies
3 Also, bank checks provide additional control feature that prevent
misappropriation of cash. A payee can be specifically named such that no 8
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other person or entity can use it. Moreover, a check can be crossed or
restricted for payee's account only.
0 TYPES OF BANK ACCOUNTS 5
1 TIME DEPOSIT ACCOUNT
this account is aimed at those who have a lump sum
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which they want to invest over a set period of time.

2 time deposit accounts are investment placements.

The depositor agrees not to withdraw the funds over
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the contracted period in exchange for fixed interest
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rates that are higher than deposit rates. Time
deposits are evidenced by certificates of time
deposits (CTD).

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BANKING
2 DOCUMENTS
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0 BANKING 5
DOCUMENTS
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DEPOSIT SLIP

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is a small written
form that is used to
deposit funds into
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a bank account.

3 (Cash Deposit)

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0 BANKING DOCUMENTS 5
1 WITHDRAWAL SLIP
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2 is a written order instructing the bank to withdraw
funds from your account. 7
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0 WITHDRAWAL SLIP 5
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0 BANKING DOCUMENTS 5
1 PAYMENT SLIP 6
used for the efficient, inexpensive invoicing of domestic

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business transactions.
The payment is directly deposited into an account and
the client is subsequently notified.

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0 PAYMENT SLIP 5
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0 BANKING DOCUMENTS 5
1 CHECK 6
is an instrument that orders a bank (drawee) to

2 pay the person named on the check or the bearer

(payee) a definite amount of money from the
drawer's bank account.
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0 CHECK 5
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THANK
YOU!!!