The
word 'reconcile' means 'to make two things agree', in this case check that the
bank statement and Cask Book bank account balances are the same - even though
they on the face of ot appear to be different. How
to deal with questions asking for a Bank Recociliation Statement
1) Update the Cash Book using information from the Bank
Statement 2) Prepare a Bank Reconciliation
Statement (starting with the new updated Bank Balance from the revised Cash Book) The
Bank Reconciliation Statement should show how it is that the balances of the Bank
Account appear to be different. In other words, it will reconcile the Cash Book
with the Bank Statement (in other words, make them agree). What
may be the reasons for the two records of how much money is in the bank account
not agreeing?
The
Bank Statement may not be up to date for the following
reasons: | |
The Cash Book bank account balance may not be up to
date for the following
reasons: | | 1)
Cheques received by the business and entered in the cash book have been paid into
the bank - but the cheques have not yet cleared through the banking system (it
usually takes 3 1/2 days for banks to process cheques). | |
1) Standing Orders and Direct Debits may
have been paid by the bank from the bank account (and these will not yet have
been entered in the Cash Book). | | | | 2)
Payment could be received from customers by automatic transfer or BACS (and these
will not yet have been entered in the Cash Book). |
| 
