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AQA A-Level Accounting
4. Verification of accounting records
4.1 Bank reconciliation
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Reconciliation helps uncover errors made by the company or the
bank
Match the document with its purpose:
Company's Cash Account Ledger ↔️ Tracks cash inflows and outflows
Bank Statement ↔️ Provides external validation of cash account ledger
Bank Reconciliation Statement ↔️ Identifies and explains discrepancies
The company's cash account ledger tracks all cash receipts and
payments
Steps to prepare a bank reconciliation statement:
1️⃣ Compare the cash account ledger and bank statement
2️⃣ Identify reconciling items
3️⃣ Adjust the balances
4️⃣ Prepare the bank reconciliation statement
What is bank reconciliation?
Matching accounting records with bank statement
Bank reconciliation ensures accurate cash balances for effective cash flow management.
True
A bank statement includes outstanding checks and deposits.
True
What are reconciling items in bank reconciliation?
Transactions in one record but not the other
Bank reconciliation helps identify errors, control cash flow, and prevent
fraud
Match the document with its role in bank reconciliation:
Cash Account Ledger ↔️ Tracks internal cash transactions
Bank Statement ↔️ Provides external transaction summary
Bank Reconciliation Statement ↔️ Reconciles discrepancies between records
A bank statement validates the company's cash account
ledger
What is the first step in preparing a bank reconciliation statement?
Compare the ledger and statement
What is the final document prepared in the bank reconciliation process?
Bank reconciliation statement
The cash book is used in the
bank reconciliation
process.
True
What is the purpose of comparing the cash book with the bank statement?
Identify reconciling items
Reconciling items must be identified to prepare an accurate
bank reconciliation statement
.
True
A company's cash account ledger tracks all cash receipts and
payments
Steps to prepare a bank reconciliation statement:
1️⃣ Compare the cash account ledger and bank statement
2️⃣ Identify reconciling items
3️⃣ Adjust the balances
4️⃣ Prepare the bank reconciliation statement
Preparing a bank reconciliation statement helps
prevent
fraud.
True
To prepare the bank reconciliation statement, you must adjust the cash account ledger balance to match the bank statement
balance
Steps to prepare the bank reconciliation statement
1️⃣ Compare the cash account ledger and bank statement
2️⃣ Identify reconciling items
3️⃣ Adjust the balances
4️⃣ Prepare the bank reconciliation statement
The cash book is a crucial document used in the bank reconciliation process because it allows comparison with the bank
statement
Match the reconciling item with its description:
Outstanding checks ↔️ Checks issued but not cleared
Deposits in transit ↔️ Deposits not yet recorded
Bank charges ↔️ Fees charged by the bank
Interest earned ↔️ Interest credited by the bank
To investigate the causes of discrepancies, you should review transaction dates, amounts, and
descriptions
Steps to identify differences between the bank statement and cash book
1️⃣ Compare balances
2️⃣ Highlight reconciling items
3️⃣ Investigate causes
Interest earned on the company's account should be added to the cash book
balance
Steps to prepare the final bank reconciliation statement
1️⃣ Start with bank statement balance
2️⃣ Add deposits in transit
3️⃣ Subtract outstanding checks
4️⃣ Calculate reconciled bank balance
5️⃣ Start with adjusted cash book balance
6️⃣ Compare bank and cash balances
The final step in preparing the bank reconciliation statement is to ensure the reconciled bank balance matches the adjusted cash book
balance
Adjusting the cash account ledger balance involves adding or subtracting
reconciling items
.
True
Reasons why bank reconciliation is necessary:
1️⃣ Identify errors
2️⃣ Control cash flow
3️⃣ Prevent fraud
The company's cash account ledger includes the
current cash balance
.
True
Outstanding checks are reconciling items because they appear in the bank statement but not the cash account ledger.
False
To prepare a bank reconciliation statement, you must adjust the company's cash account ledger balance using reconciling
items
The cash book is a record of all cash receipts and
payments
Match the cash book content with its purpose:
Date ↔️ Records when the transaction occurred
Receipts ↔️ Tracks cash inflows
Payments ↔️ Tracks cash outflows
Balance ↔️ Shows current cash position
Outstanding checks are checks issued by the company but not yet cleared by the
bank
What are the key documents used in bank reconciliation?
Cash account ledger, bank statement, bank reconciliation statement
Match the document with its purpose:
Cash Account Ledger ↔️ Tracks cash inflows and outflows
Bank Statement ↔️ Validates cash transactions
Bank Reconciliation Statement ↔️ Identifies discrepancies
Outstanding checks, deposits in transit, and bank charges are examples of
reconciling
What are reconciling items in a bank reconciliation process?
Transactions in one record only
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