• 1 Marks

FA – Nov 2012 – L1 – SB – Q33 – Bank Reconciliation

Identify items required for cash book adjustment during bank reconciliation.

When preparing a company’s bank reconciliation statement at 31 October 2012, it was discovered that the following items caused the difference between the cash book balance and the bank statement balance:

A. Bank charges N5,005
B. Cheque of N105,000 incorrectly debited by the bank to the account
C. Cheque paid in by the company but dishonoured amounted to N55,500
D. Uncredited lodgement N62,800

Which TWO of the items above will be required for cash book adjustment?

A (Bank charges N5,005) and C (Dishonoured cheque of N55,500).

Explanation:
Bank charges and dishonoured cheques are transactions that would need to be reflected in the cash book but are usually missing until reconciliation. These items directly affect the company’s cash balance. Therefore, adjustments need to be made in the cash book for bank charges (N5,005) and the dishonoured cheque (N55,500) to reconcile with the bank statement. The other two items—incorrectly debited cheque and uncredited lodgement—are bank statement errors, so they do not require cash book adjustments.

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