 Steps in the Bank reconciliation

Step 1 Identify deposit in trance and related errors.

Step2Identify outstanding check and any related errors.

Step 3 Identify additional reconciling item.

 Deposit in transit and related errors

Step 1 compare deposit listed on the bank statement with deposit in transit on last month bank
reconciliation. All of last month deposit in transit should appear on the current month bank
statements.

Step 2compares the remaining deposit on the bank statement with deposits listed in the
accounting records. Any deposit listed in the accounting records but not on the bank
statements are deposit in transit on the current bank reconciliation.

Step 3compares the individual deposit amounts on the bank statements and in the accounting
records. If they differ, the needs to be corrected.

 Outstanding checks and related Errors. Follow the these stapes

Step 1 compare cancelled checks with the bank statement and the accounting records. If the
amounts, If they differ the needs to be corrected.

Step 2as each cancelled check is compared with the accounting records, place a check mark on
the check sub or other accounting records to identical that the check has cleared.

Step 3any checks written that have not been checked off represent outstanding checks on the
bank reconciliation

 Additional reconciling items.

 Compare any additions and deductions on the bank statement that are
not deposits or checks with the accounting records.
 Items that the bank adds to the account are called credit memos.
 Items that the bank deducts from the account are called debit memos.
Any of these items not appearing in the accounting records represent
additional items on the bank reconciliation.
Heading
Bank Reconciliation
For the month -------------
1 Balance per Bank----------------------------------------------------xxx
Add:- Deposit in transit--------------------------------xx

 Deposit erroneously --------------------------xx +

 Check erroneously------------------------------xx
Total -------------------------------------------------------xxx------------xxxxxx
Less:- check outstanding -----------------------------xx

 Deposit erroneously -------------------------xx -

 Check erroneously----------------------------xx
Total -----------------------------------------------------xxx---------------(xxx)
Adjusted Bank Balance ------------------------------------------------xxx
2 Balance per Deposit---------------------------------------------------xxx
Add:-credit memo
Account receivable ---------------------------xx
Interest Revenue-------------------------------xx +

 Deposit erroneously-------------------------xx

 Check erroneously ---------------------------xx

Total -----------------------------------------------------xxx-------------------xxxx
Less:-debit memo
Not sufficiency Fund (NSF)------------------------xx
Service charge ---------------------------------------xx -

Collection Fee----------------------------------------xx
 Collection printing cost----------------------------xx
 Deposit erroneously----------------------------------xx
 Check erroneously------------------------------------xx
Total ---------------------------------------------------------------xxx--------------xxxx
Adjusted Depositor Balance---------------------------------------------------xxx

What is Cash Book Balance?

 Cash book balance states the cash balance recorded by the company in company’s cash
book. Following transactions are generally included in the cash book but not in the bank
statement, thus resulting in a discrepancy.

What is Bank Statement Balance?

 Bank statement balance is the cash balance recorded by the bank in bank records. Service
charges, interest income and NSF (Not Sufficient Funds) checks are entries that result in
a discrepancy since these are recorded in the bank statement but not included in the cash
book.

 What are the causes of difference between cashbook and bank statement?
 The key difference between cash book balance and bank statement balance is that cash
book balance states the cash balance recorded by the company in company's cash book
whereas bank statement balance is the cash balance recorded by the bank in bank
records.
DEPARTEMENT :- ACCOUNTING AND FINANCE

Accounting and budget support(ABS)

LEVEL III

Group Name IDNo

1. Ashenafi kotofa 0471/18

2. Abdulkerim Abdi 0369/18

Submitted date:11/01/2012

To Te. Abeba