Assignment in Chapter 2

1. Explain the three kinds of bank deposits.

- The first kind of bank deposit is the Demand deposit. It is the current
account or checking account or commercial deposit where deposits are
covered by deposit slips and where funds are withdrawable on demand
by drawing checks against the bank. In short, a demand deposit is not
an interest bearing. The next one is the Saving deposit. In a Saving
deposit the depositor is given a passbook upon the initial deposit. The
passbook is required when making deposits and withdrawals. Unlike to
the Demand deposit, saving deposit is an interest bearing. The last kind
of bank deposit is the Time deposit. This is similar to saving deposit in
the sense that it is interest bearing. Time deposit is evidenced, by a
formal agreement in the form of an instrument called, “certificate of
deposit”.
2. What is a bank reconciliation?
- It is a statement which brings into agreement the cash balance per book
and cash balance per bank.
3. What is a bank statement?
- This is a monthly report of the bank to the depositor showing the cash
balance per bank at the beginning, the deposits made by the depositor
and acknowledged by the bank, the checks drawn by the depositor and
paid by the bank, and the daily cash balance per bank during the month.
4. What are credit memos?
- These refer to the items not representing deposits credited by the bank
to the account of the depositor but not yet recorded by the depositor as
cash receipts.
5. What are debit memos?
- These refer to items not representing checks paid by the bank which are
charged or debited by the bank to the account of the depositor but not
yet recorded by the depositor as cash disbursements. The debit memos
have the effect of decreasing the bank balance.
 6. What are deposits in transit?
- These are collections that were already recorded by the depositor as
cash receipts but not yet reflected on the bank statement.
7. What are outstanding checks?
- These are checks already recorded by the depositor as cash
disbursements but not yet reflected on the bank statement.
8. Define a certified check.
- It is where the bank has stamped on its face the word “accepted” or
“certified” indicating sufficiency fund.
9. What is the treatment of certified check for bank reconciliation purposes?
- When a bank certifies a check, the account of the depositor is
immediately debited or charged to insure the eventual payment of the
check. These certifies checks should be deducted from the total
outstanding checks (if included therein) because they are no longer
outstanding for bank reconciliation purposes.
10. Explain the three forms of bank reconciliation.
- The first one is the Adjusted balance method. Under in this method, the
book balance and the bank balance are brought to a correct cash
balance that must appear on the balance sheet. The second one is the
Book to bank method. In this method, the book balance is reconciled
with the bank balance or the book balance is adjusted to equal the bank
balance. Lastly, is the Bank to book method. Under this method, the
bank balance is reconciled with the book balance or the bank balance is
adjusted to equal the book balance.

Prepared By:

Rejie N. Ando (BSA 1)