L6 03 Bank reconciling items

• Deposits in Transit – These are collections already recorded by the depositor as cash receipts but not yet reflected on the bank statements (e.g., undeposited collections). It is typically the day’s cash receipts recorded in the depositor’s books in one period but recorded as a deposit by the bank in the succeeding

  period. The most common deposit in transit is the deposit of cash receipts of the last business day of the month.
• Outstanding Checks – These checks are already recorded by the depositor as cash disbursements but

  not yet reflected on the bank statement (e.g., check drawn but not yet presented by payee for payment and

  certified checks).these are checks issued by the depositor that has not yet been presented to the bank for

  payment. The party receiving the check may not deposit it immediately. As a result, sometimes it takes

  several days or even weeks for checks written to clear the banking system. Hence, the depositor must

  deduct the outstanding checks from the balance per bank.
• Bank reconciling items

  1. Deposits in Transit
  2. Outstanding Checks
  3. Errors