Watch here Reconciliation Bank video from Financial Accounting topic.
Usually there always will be a difference between Cash Book and Bank Statement. These differences are adjusted, corrected or explained during the Bank Reconciliation process and their treatment depends on the type of differences.
1. Informational differences include items not recorded in the Cash Book, but present in the Bank Statement due to mistakes in the cash book and due to payments made from or received to the bank account directly, also bank charges to the bank account represent informational differences. What to do?
Adjust Cash Book by these items.
2. Timing differences remain after informational differences are adjusted. These differences are explained in Reconciliation Bank Statement with Cash Book. Such differences represent those items which were recorded at different times in Cash Book and Bank Statement. What to do?
Explain them in the reconciliation going from Cash Book balance to the Bank Statement balance. No adjustments are necessary.
Watch Reconciliation Bank - Financial Accounting Topic Video below:
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