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ACCA Applied Knowledge · Financial Accounting · Bank reconciliations

Which one of the following items found when comparing the bank statement with the cash book requires an adjustment to the cash book?

Bank charges on the statement that are not in the cash book need a cash book adjustment. Unpresented cheques and outstanding lodgements are timing differences already recorded by the business, so they appear only in the reconciliation and need no cash book entry.

  1. AA cheque issued to a supplier that has not yet been presented to the bank
  2. BBank charges shown on the bank statement but not yet recorded in the cash bookCorrect
  3. CCheques received and recorded in the cash book but not yet credited by the bank
  4. DA deposit paid in on the last day of the month and not yet appearing on the statement

Explanation

Bank charges are known to the bank but not yet recorded by the business, so the cash book must be updated by crediting bank and debiting bank charges. The other items are timing differences that appear in the bank reconciliation only, because the business has already recorded them correctly.

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