Financial Accounting · Bank reconciliations

Timing Differences: Unpresented Cheques and Outstanding Lodgements in ACCA

Updated 11 October 2026 · Fact-checked

Unpresented cheques are payments you have recorded in the cash book that the bank has not yet processed. Outstanding lodgements are receipts recorded in the cash book but not yet credited by the bank. Neither changes the cash book. You adjust the bank statement balance: subtract unpresented cheques, add outstanding lodgements.

Understand Timing Differences: Unpresented Cheques and Outstanding Lodgements

A business keeps its own record of cash at bank, the cash book. The bank keeps its own record, the bank statement. The two rarely agree on the same day. A bank reconciliation explains the difference.

Some differences are timing differences. The business has recorded the transaction, but the bank has not yet processed it. Nothing is wrong with the cash book. The bank will catch up in a few days.

An unpresented cheque (also called an outstanding cheque) is a cheque you have written and entered as a payment in the cash book. The supplier has not yet banked it, or the bank has not yet cleared it. So the money has left your books but not yet your bank account.

An outstanding lodgement (also called a deposit in transit or uncleared lodgement) is money you have paid in and entered as a receipt in the cash book. The bank has not yet credited it to your account. So the money is in your books but not yet in your bank balance.

Because the cash book is already correct for these items, you make no cash book entry and no journal. You only adjust the bank statement balance so it matches the corrected cash book balance. Many exams ask for the balance as per the cash book or the statement, so you must know which side you are adjusting.

Key formulas to remember

Reconciling from the bank statement (asset balance): Adjusted bank balance = Balance per bank statement − Unpresented cheques + Outstanding lodgements; Use when the statement shows a positive (credit) balance, meaning the business has money at the bank.
Reconciling from the bank statement (overdraft): Adjusted overdraft = Overdraft per statement + Unpresented cheques − Outstanding lodgements; Treat the overdraft as a negative number and apply the same rule: subtract cheques, add lodgements. Then state the result as an overdraft if it is negative.
Timing difference rule: Unpresented cheques and outstanding lodgements need no cash book adjustment; They are already in the cash book. Only bank-side items such as charges, interest, direct debits and dishonoured cheques need cash book entries.
Result check: Adjusted statement balance = Updated cash book balance; After all adjustments the two balances must agree. If they do not, you have missed or mishandled an item.

How to solve Timing Differences: Unpresented Cheques and Outstanding Lodgements questions

Use this method for any question that gives a cash book balance, a bank statement balance and a list of differences.

1Identify which balance you are given: the cash book balance or the bank statement balance, and whether each is a positive balance or an overdraft.
2Sort every difference into one of two groups: items needing a cash book entry (bank charges, interest, direct debits, standing orders, direct credits, dishonoured cheques, errors) and timing differences (unpresented cheques, outstanding lodgements).
3Update the cash book first for the first group. Add receipts, deduct payments, and find the corrected cash book balance.
4Start the reconciliation from the bank statement balance. Subtract unpresented cheques and add outstanding lodgements.
5Compare the result with the corrected cash book balance. They must be equal.
6Answer the exact question asked. It may be the corrected cash book figure, the statement balance, or the figure for the statement of financial position, shown as an asset or an overdraft.

Quickest way: Direction check: where did the cash go?

When to use it: Use this in multiple choice and number entry questions when you only need the adjusted balance or the missing figure.

Ask: is this item already in the cash book? If yes, it is a timing difference and affects only the statement side.
For a cheque you wrote: the bank balance will fall when it clears, so subtract it from the statement balance.
For a deposit you made: the bank balance will rise when it is credited, so add it to the statement balance.
Do the sum on the statement side. Do not touch the cash book for these items.
Check the sign of the final answer. A negative result is an overdraft.

Common mistakes in Timing Differences: Unpresented Cheques and Outstanding Lodgements

Adding unpresented cheques to the statement balance.
Students think a cheque is a receipt, or they mix up the direction because the cash book and the bank statement are mirror images.
Fix: Remember the bank will deduct the cheque later. So deduct it now from the statement balance to reach the true balance.
Posting unpresented cheques or outstanding lodgements to the cash book.
Students treat every reconciling item as a correction to the cash book.
Fix: Check whether the item is already in the cash book. Timing differences are, so they never need a cash book entry.
Confusing the two terms.
The words sound similar and both describe items not yet on the statement.
Fix: Cheques are payments out. Lodgements are money paid in. Link cheque with payment and lodgement with deposit.
Ignoring an overdraft when reconciling from the statement.
Students apply the formula without noting whether the opening figure is positive or negative.
Fix: Write the overdraft as a negative number first. Then subtract cheques and add lodgements as usual.
Using the wrong starting balance when the question gives the cash book figure.
Students apply the timing rule to the cash book balance, but those items are already in it.
Fix: Reverse the logic only if you reconcile from the cash book to the statement: add back unpresented cheques and deduct outstanding lodgements. Better still, always reconcile from the statement to the cash book.
Reporting the statement balance in the statement of financial position.
Students forget the corrected cash book balance is the figure that belongs in the accounts.
Fix: Use the updated cash book balance, or the adjusted balance, for the statement of financial position. They should be equal.

Worked examples

Example 1

At 31 March, the bank statement of Kiwi Co shows a balance of $12,400 in credit. The cash book has been fully updated for bank charges and interest. Cheques totalling $3,150 have been written but not yet presented. A deposit of $1,800 was made on 31 March and does not appear on the statement. What adjusted bank balance should be reported in the statement of financial position at 31 March?

Show the solution

Start with the statement balance: $12,400 positive.
Subtract the unpresented cheques: $12,400 − $3,150 = $9,250.
Add the outstanding lodgement: $9,250 + $1,800 = $11,050.
No cash book entries are needed, because both items are already in the cash book.

Answer: The adjusted bank balance is a positive bank balance of $11,050 (an asset). It agrees with the updated cash book balance.

Example 2

The cash book of Sable Ltd shows an overdraft of $5,370 at 30 June. The bank statement shows an overdraft of $1,570. The cash book has already been updated for all bank-side items. The only differences are unpresented cheques of $4,100 and an outstanding lodgement of $300. Show that the statement reconciles to the cash book.

Show the solution

Write the statement overdraft as a negative number: −$1,570.
Subtract the unpresented cheques: −$1,570 − $4,100 = −$5,670.
Add the outstanding lodgement: −$5,670 + $300 = −$5,370.
This gives an overdraft of $5,370, which equals the cash book overdraft of $5,370. The statement reconciles.

Answer: The adjusted statement balance is an overdraft of $5,370. It equals the cash book overdraft of $5,370, so the two agree and no other reconciling item is needed.

Exam tips

Read the question for the starting balance. Many marks are lost by working from the wrong side.
Sort items into two lists before calculating: cash book entries and timing differences. Only the second list belongs in the reconciliation.
In multiple response questions, pick items that are already in the cash book as timing differences. Bank charges and dishonoured cheques are not timing differences.
In number entry, state the sign. If the result is negative, enter it as an overdraft as the question requires.
Use the final check: adjusted statement balance must equal the updated cash book. If not, find the missing item.

Practice questions from Bank reconciliations

Timing Differences: Unpresented Cheques and Outstanding Lodgements: frequently asked questions

What is the difference between unpresented cheques and outstanding lodgements?

Unpresented cheques are payments you have recorded that the bank has not yet processed. Outstanding lodgements are deposits you have recorded that the bank has not yet credited. One reduces the statement balance and the other increases it.

How do you treat outstanding lodgements in a bank reconciliation?

Add them to the bank statement balance. They are already in the cash book, so you make no cash book entry. They will appear on the statement soon after.

Do unpresented cheques need a journal entry?

No. They are already recorded in the cash book as payments. You only deduct them from the statement balance in the reconciliation.

Are unpresented cheques and uncleared deposits the same type of item?

They are both timing differences, but they work in opposite directions. Unpresented cheques are payments out. Uncleared deposits, also called outstanding lodgements, are money in.