I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART E: PREPARING A TRIAL BALANCE 

 

264

 

 

Study Guide 

Intellectual level 

 

 

E  Preparing a trial balance 

 

 

 

4 Bank 

reconciliations 

 

 

 

(a)  Understand the purpose of bank reconciliations. 

K 

 

 

(b)  Identify the main reasons for differences between the cash 

book and the bank statement. 

K 

 

 

(c)  Correct cash book errors and/or omissions. 

S 

 

 

(d)  Prepare bank reconciliation statements. 

S 

 

 

(e)  Derive bank statements and cash bank balances from given 

information. 

S 

 

 

(f)  Identify the bank balance to be reported in the final accounts. 

S 

 

 

 

 

 

 

1

   Bank statement and cash book 

In theory, the entries appearing on a business's bank statement should be exactly the same as those in 

the business cash book. The balance shown by the bank statement should be the same as the cash book 

balance on the same date. 

The cash book of a business is the record of how much cash the business believes that it has in the 

bank. In the same way, you might keep a private record of how much you think you have in your own 

bank account, perhaps by making a note in your cheque book of income received and the cheques you 

write. If you do keep such a record, you will probably agree that your bank statement balance is rarely 

exactly the same as your own figure. 

Why might your own estimate of your bank balance be different from the amount shown on your bank 

statement? There are three common explanations. 

(a) 

Error. Errors in calculation, or recording income and payments, are more likely to have been made 

by you than by the bank, but it is conceivable that the bank has made a mistake too. 

(b)