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    Financial Accounting Chapter 8

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    Noel Guerra
    1. The document discusses bank reconciliation, which brings the cash balance per books into agreement with the cash balance per bank statement. 2. It explains the key items involved in reconciling the two balances, including deposits in transit, outstanding checks, credit memos, debit memos, and errors. 3. There are three common methods for performing bank reconciliation - adjusted balance method, book to bank method, and bank to book method. The adjusted balance method adjusts either the book or bank balance to make them equal, while the book to bank and bank to book methods reconcile one balance to the other.

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    Financial Accounting Chapter 8

    Uploaded by

    Noel Guerra
    792 views2 pages
    1. The document discusses bank reconciliation, which brings the cash balance per books into agreement with the cash balance per bank statement. 2. It explains the key items involved in reconciling the two balances, including deposits in transit, outstanding checks, credit memos, debit memos, and errors. 3. There are three common methods for performing bank reconciliation - adjusted balance method, book to bank method, and bank to book method. The adjusted balance method adjusts either the book or bank balance to make them equal, while the book to bank and bank to book methods reconcile one balance to the other.

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    1. The document discusses bank reconciliation, which brings the cash balance per books into agreement with the cash balance per bank statement. 2. It explains the key items involved in reconciling the two balances, including deposits in transit, outstanding checks, credit memos, debit memos, and errors. 3. There are three common methods for performing bank reconciliation - adjusted balance method, book to bank method, and bank to book method. The adjusted balance method adjusts either the book or bank balance to make them equal, while the book to bank and bank to book methods reconcile one balance to the other.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    792 views2 pages

    Financial Accounting Chapter 8

    Uploaded by

    Noel Guerra
    1. The document discusses bank reconciliation, which brings the cash balance per books into agreement with the cash balance per bank statement. 2. It explains the key items involved in reconciling the two balances, including deposits in transit, outstanding checks, credit memos, debit memos, and errors. 3. There are three common methods for performing bank reconciliation - adjusted balance method, book to bank method, and bank to book method. The adjusted balance method adjusts either the book or bank balance to make them equal, while the book to bank and bank to book methods reconcile one balance to the other.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Financial accounting Chapter 8 Bank statement a monthly report depositor as cash

    of the bank to the depositor showing: disbursements. It decreases the


    3 kinds of bank deposits bank balance.
    A. The cash balance per bank at the
    1. DEMAND DEPOSIT beginning. Examples:
    This is the current account or B. The deposits made by the depositor
    checking account or commercial and acknowledged by the bank. 1. NSF or No sufficient Fund
    deposit where deposits are C. The checks drawn by the depositor Checks/ DAIF or Drawn
    covered by deposit slips and and paid by the bank. Against Insufficient Funds
    D. The daily cash balance per bank These are checks deposited but
    where funds are withdrawable
    during the month. returned but the bank because
    on demand by drawing checks of insufficiency of fund.
    against the bank. It is RECONCILING ITEMS 2. Technically Defective Checks
    noninterest bearing. These are checks deposited but
    1. BOOK RECONCILING ITEMS returned by the bank because
    2. SAVING DEPOSIT of technical defects such as
    The depositor is given a A. CREDIT MEMOS absence of signature or
    passbook upon initial deposit. Refer to items not representing countersignature, erasures not
    The passbook is required when deposits credited by the bank to countersigned, mutilated
    making deposits and the account of the depositor but checks, conflict between
    not yet recorded by the amount in words and amount in
    withdrawals. It is interest
    depositor as cash receipts. It figures.
    bearing. 3. Bank Service Charge
    increases the bank balance.
    These include bank charges for
    3. TIME DEPOSIT interest, collection, checkbook
    Examples:
    May be preterminated or and penalty.
    withdrawn on demand or after a 1. Notes receivable collected by 4. Reduction of Loan
    certain period of time agreed bank in favor of the depositor This pertains to amount
    upon. It is evidenced by a and credited to the account of deducted from the current
    formal agreement embodied in the depositor. account of the depositor in
    an instrument called certificate 2. Proceeds of bank loan credited payment for loan which the
    to the account of the depositor. depositors owe to the bank and
    of deposit. It is interest bearing.
    3. Matured time deposits which has already matured.
    transferred by the bank to the C. ERRORS
    BANK RECONCILATION
    current amount of the depositor.
    Is a statement which brings into
    B. DEBIT MEMOS 2. BANK RECONCILING ITEMS
    agreement the cash balance per book
    Refer to items not representing
    and cash balance per bank. checks paid by bank which are A. DEPOSITS IN TRANSIT
    charged or debited by the bank Collections already recorded by
    Prepared Monthly. the depositor as cash receipts
    to the account of the depositor
    but not yet recorded by the
    but not yet reflected on the cash balance that must appear
    bank statement. INCLUDES: on the balance sheet.

    INCLUDES: 1. Checks draw and already given B. Book to Bank Method


    to payees but not yet presented The book balance is reconciled
    1. Collections already forwarded to for payments. with the bank balance or the
    the bank for deposit but too late 2. CERTIFIED CHECKS one book balance is adjusted to
    to appear in the bank where the bank has a stamped
    equal the bank balance.
    statement. on its face the word accepted
    2. Undeposited collections or or certified indicating sufficient C. Bank to Book Method
    those still in the hands of the of fund. The bank balance is reconciled
    depositor. C. ERRORS
    with the book balance or the
    B. OUTSTANDING CHECKS Forms of bank reconciliation bank balance is adjusted to
    Checks already recorded by the equal the book balance.
    depositor as cash A. Adjusted Balance Method
    disbursements but not yet The book balance and the bank
    reflected on the bank balance are brought to a correct
    statement.

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