Y10 Accounting - C14 Bank Reconciliation Statements

What is the purpose of a bank statement?

• To compare with the cash book

• To record all transactions

• To notify the bank of errors

• To show the customer's account balance

What should be done if the bank account and bank statement balances do not agree?

• Ignore the differences

• Perform a bank reconciliation

• Update the bank statement

• Close the bank account

Which of the following is NOT a reason for differences between the bank account and bank statement?

• Direct deposits made by the bank

• Bank charges not recorded

• Errors made by the business

• Cheques not yet presented

What is the first stage of bank reconciliation?

• Update the cash book

• Prepare a bank reconciliation statement

• Compare the bank account with the bank statement

• Correct any errors in the cash book

What should be done with items that appear on the bank statement but not in the cash book?

• Record them as bank errors

• Debit them to the cash book

• Credit them to the cash book

• Ignore them

What is a stale cheque?

• A cheque that is still valid

• A cheque that has been cashed

• A cheque that has been lost

• A cheque that is over 6 months old

What does a bank overdraft represent?

• A credit balance in the cash book

• A payment made to the bank

• A loan from the bank

• A debit balance on the bank statement

Which of the following is an advantage of bank reconciliation?

• It eliminates all bank fees

• It provides an accurate bank balance

• It guarantees no errors will occur

• It prevents all fraud

What should be done with errors made by the bank?

• Record them as bank charges

• Correct them in the cash book

• Notify the bank

• Ignore them

What is the last step in preparing a bank reconciliation statement?

• Compare with the bank statement

• Deduct uncredited amounts

• Add unpresented cheques

• Show the updated cash book balance