Topic: Bank reconciliations

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  • 10 Marks

FA – Nov 2024 – L1 – Q3b – Bank Reconciliation

Prepare an adjusted cash book and reconcile it with the bank statement balance.

The cash book of Lawra Ltd as at 31 December 2023 shows a balance of GH¢36,900, which does not match the bank statement balance of GH¢41,100. Investigation revealed the following discrepancies:

  1. Cheques received of GH¢104,000, GH¢10,000, and GH¢24,900 were still in the business drawer.

  2. Standing orders for electricity charges (GH¢2,400) and insurance (GH¢3,600) were paid by the bank but not recorded in the cash book.

  3. The bank charged GH¢300 for a cheque book issued to Lawra Ltd.

  4. The bank incorrectly debited GH¢9,910 to Lawra Ltd’s account, which was intended for another customer.

  5. A credit transfer of GH¢10,000 was received but not recorded in the cash book.

  6. A cheque for GH¢140,000 drawn by Lawra Ltd was correctly recorded in the cash book but was debited as GH¢14,000 by the bank.

  7. The following cheques, paid in November 2023, remained unpresented:

    Cheque Number Amount (GH¢)
    0000111 4,000
    0000117 10,000
    0000120 9,310

Required:

i) Prepare the adjusted cash book for Lawra Ltd as at 31 December 2023.

ii) Prepare a bank reconciliation statement reconciling the adjusted cash book balance to the bank statement balance.  

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  • 15 Marks

FA – May 2012 – L1 – SB – Q4 – Bank Reconciliation

Identify causes of discrepancies between cashbook and bank statement and prepare bank reconciliation.

The general day-to-day banking activities of business enterprises are bound to generate large volumes of transactions to the extent that there are always disagreements between the bank balance shown in the accounts of an organisation and the balance shown in the bank statement.

(a) You are required to state any FIVE causes of disagreement between the cash book balance and the bank statement.
(5 marks)

(b) The cashbook of Ecobiz Plc showed an overdraft of N180,000 on 31 March 2011 while the bank statement balance was an overdraft of N1.6m. On checking the two records, you made the following discoveries:

  1. Cheques drawn in respect of payment made to suppliers amounting to N250,000 had been entered in the cash book but were yet to be presented to the bank.
  2. Ecobiz Plc instructed the bank to transfer interest of N40,000 due on its bank deposit account to the current account and this was not effected by the bank until April 2011 whereas the entries have been made in the cash book.
  3. The bank made e-payment charges of N50,000 on the company’s account.
  4. The receipt side of the cash book was overcast by N100,000 by the account clerk.
  5. Cheques received and deposited to the bank which amounted to N480,000 had been entered in the cash book but had not been credited by the bank.
  6. E-dividend payments made through the bank by the company amounting to N360,000 were yet to be posted in the company’s cashbook.
  7. A cheque issued for the purchase of office equipment had been entered in the bank statement as N800,000 instead of N300,000.
  8. A cheque for N70,000 issued to one of the suppliers included in (i) above had been erroneously posted on the wrong side of the cash book (i.e. the receipt side).

Prepare the adjusted cash book and a statement reconciling the amended balance with that shown in the bank statement.
(10 marks)

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  • 1 Marks

FA – Nov 2011 – L1 – SA – Q3 – Bank Reconciliation

This question asks about the source document used to identify an uncredited lodgement.

What is the source document by which a bank reconciliation officer can identify an uncredited lodgement?

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  • 1 Marks

FA – Nov 2020 – L1 – SA – Q20 – Bank Reconciliation

Determines the correct overdraft position after reconciling bank errors.

Bode’s cash book showed he had an overdraft of N20,300. A bank reconciliation, however, indicated that a standing order payment of N3,650 had been entered in the cash book twice, and that a returned customer’s cheque for N2,750 had been debited in the cash account.

What is Bode’s true overdraft position?
A. N12,150
B. N18,450
C. N19,400
D. N21,200
E. N22,150

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  • 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?

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  • 1 Marks

FA – Nov 2012 – L1 – SA – Q8 – Bank Reconciliation

Identifying the cause of discrepancy between the cash book and the bank statement.

Which of the following does NOT cause a discrepancy between cash book and bank statement balances?

A. Direct credit found in the bank statement
B. Credit sales posted to the debit side of the cash book (bank column)
C. COT and other finance costs credited in the bank statement
D. The company’s credit balance in the bank statement
E. Subscription paid by the bank on behalf of the company’s manager and debited in the bank statement

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  • 1 Marks

FA – May 2014 – L1 – SA – Q19 – Bank reconciliations

This question tests knowledge of terminology for guaranteed minimum payments in royalty agreements.

The guaranteed amount payable where the royalty calculated on the basis of actual production falls short of the estimated level is ………………………

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  • 1 Marks

FA – May 2014 – L1 – SA – Q7 – Bank reconciliations

This question tests knowledge of items requiring cash book adjustment in bank reconciliation.

During the preparation of your company’s bank reconciliation statement as at 31 October, 2013, you discovered that the following items caused the difference between the cash book balance and bank statement balance:

i. Bank charges N3,502 ii. Uncredited lodgement N75,000 iii. Cheque of N85,500 paid in by the Company but dishonoured iv. Amount of N225,000 incorrectly debited by the bank to the account

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

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  • 1 Marks

FA – May 2014 – L1 – SA – Q5 – Bank Reconciliation

Defines unpresented cheques in accounting.

Which of the following statements best defines unpresented cheques?
A. Cheques paid by the bank but not yet recorded in the cash book
B. Cheques that are yet to be credited to the customer’s account
C. Cheques issued by the business but not yet presented for payment
D. Cheques that are stale and no longer acceptable for payment
E. Cheques that have been returned due to insufficient funds

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  • 20 Marks

FA – Nov 2015 – L1 – SB – Q2 – Bank Reconciliation

Preparing an adjusted cash book and bank reconciliation for a club with discrepancies.

a. Bank Statement is a mirror of any entity’s cash book, and they are expected to have equal balances at any point in time. However, this is not usually the case. Based on the ongoing statement, state five reasons that could cause the bank statement balance to differ from the cash book balance. (5 Marks)

b. The Treasurer of Young Star Social Club (YSSC) did not keep proper records for receipts and payments for the month of December 2014, causing mistrust among members. He has decided to seek your assistance to prepare a bank reconciliation statement before presenting the account to the club members.

The bank statement and the receipts and payments cash book of the club on December 31, 2014, showed a credit balance of N205,000 and N2,078,000, respectively. A comparison of the bank statement with the receipts and payment cash book of the club revealed the following:

i. Cheque drawn but not presented N3,160,000
ii. Amount lodged in the bank but not credited N725,000
iii. Entries in bank statement not recorded in receipts and payments cash book:

  • Standing order for loan refund N35,000
  • Interest received on deposit account N18,000
  • Bank charges N15,000
  • Cheque paid-in but returned with “refer to drawer” N120,000

Required:
i. Prepare an adjusted cash book as at December 31, 2014; (8 Marks)
ii. Prepare the Bank Reconciliation Statement showing the balance on December 31, 2014. (7 Marks)

(Total 20 Marks)

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  • 1 Marks

FA – May 2018 – L1 – SA – Q7 – Bank Reconciliation

Identifies the type of cheque not yet reflected in the bank statement.

A cheque payment recorded in the cash book, but not yet reflected in the bank statement is:
A. Uncredited cheque
B. Dishonoured cheque
C. Standing order
D. Unpresented cheque
E. Undebited cheque

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  • 20 Marks

FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

On April 6, 2020, Alhaji Mogaji received his bank statement for the month ended March 31, 2020. The bank statement showed a balance of N41,740,000 (overdraft) as at March 31, while the cash book showed a balance of N52,599,000 (credit) as at that date. On examination of the cash book and the bank statement the following were discovered:

  1. Bank charges of N201,000 had not been recorded in the cash book.
  2. Alhaji Mogaji exceeded his overdraft limit during the month of March. The bank had therefore charged him a default penalty of N250,000. This was not reflected in the cash book.
  3. A sum of N1,250,000 had been credited to Alhaji Mogaji’s bank account in error.
  4. A cheque for N1,230,000 had been returned by the bank as dishonoured. In effect, the bank charged Alhaji Mogaji N15,000, which was not reflected in the cash book.
  5. Cash receipts of N3,740,000 were posted as cash payments of N4,730,000 in the cash book.
  6. On March 21, Alhaji Mogaji transferred cash of N650,000 to his personal bank account, but this was credited to the business bank account in error by the bank.
  7. Standing orders and direct debits of N1,115,000 had not been posted to the cash book.
  8. Customers had transferred N2,170,000 directly to the bank account. The credit alert was received, but no record had been made in the cash book.
  9. An amount of N5,120,000 lodged to the bank account on March 31, 2020, had not been credited by the bank.
  10. The following cheques drawn on the bank account had not been presented for payment as at March 31, 2020:
  • Cheque No: 4528, March 11, 2020, for N840,000
  • Cheque No: 4535, March 28, 2020, for N1,740,000
  • Cheque No: 4537, March 31, 2020, for N3,670,000

You are required to:
a. Prepare the adjusted cash book for the month of March 2020. (9 Marks)
b. Prepare a statement on March 31, 2020, reconciling the bank statement balance with the adjusted cash book balance. (7 Marks)
c. Explain TWO reasons for preparing a bank reconciliation statement on a regular basis. (4 Marks)

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  • 1 Marks

FA – Nov 2021 – L1 – SA – Q15 – Bank Reconciliation

This question focuses on which bank reconciliation items should not be adjusted in the cash book.

Which of the following bank reconciliation items should NOT be added or subtracted from the cash book balance to determine the adjusted bank balance?
A. Bank service charges
B. Unpresented cheques
C. Direct transfer
D. Cash book error
E. Value added tax charges

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  • 1 Marks

FA – Nov 2021 – L1 – SA – Q5 – Bank Reconciliation

This question asks about an item credited in the bank statement but not recorded in the cash book.

An item credited in the bank statement but yet to be recorded in the firm’s cash book is:
A. Standing order
B. Direct credit
C. Direct debit
D. Uncredited lodgements
E. Unpresented cheques

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  • 1 Marks

FA – May 2022 – L1 – SA – Q15 – Bank Reconciliation

Identify which bank reconciliation item should not be added or subtracted from the cash book balance.

Which of the following bank reconciliation items should NOT be added or subtracted from the cash book balance to determine the adjusted bank balance?

A. Bank service charges
B. Unpresented cheques
C. Direct transfers
D. Cash book errors
E. Value-added tax charges

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  • 20 Marks

FA – Nov 2022 – L1 – SB – Q1 – Bank Reconciliation

This question requires preparing an adjusted cash book, a bank reconciliation statement, and an explanation of why the reconciliation is necessary.

On April 6, 2020, Alhaji Mogaji received his bank statements for the month ended March 31, 2020. The bank statement showed a balance of N41,740,000 (overdraft) as at March 31, while the cash book showed a balance of N52,599,000 (Credit) as at that date. On examination of the cash book and the bank statements, the following were discovered:

  • (i) Bank charges of N201,000 had not been recorded in the cash book;
  • (ii) Alhaji Mogaji exceeded his overdraft limit during the month of March. The bank had therefore charged him a default penalty of N250,000. This was not reflected in the cashbook;
  • (iii) A sum of N1,250,000 had been credited to Alhaji Mogaji’s bank account in error;
  • (iv) A cheque for N1,230,000 had been returned by the bank as dishonoured, and the bank charged Alhaji Mogaji N15,000. This was not reflected in the cash book;
  • (v) Cash receipts of N3,740,000 were posted as cash payments of N4,730,000 in the cash book;
  • (vi) On March 21, Alhaji Mogaji transferred cash of N650,000 to his personal bank account. This was credited to the business bank account in error by the bank;
  • (vii) Standing orders and direct debits of N1,115,000 had not been posted to the cash book;
  • (viii) Customers had transferred N2,170,000 directly to the bank account, and credit alert was received, but no record had been made in the cash book;
  • (ix) An amount of N5,120,000 lodged into the bank account on March 31, 2020, had not been credited by the bank;
  • (x) The following cheques, drawn on the bank account, had not been presented to the bank for payment as at March 31, 2020:
    • Cheque No. 4528 dated March 11, 2020, N840,000
    • Cheque No. 4535 dated March 28, 2020, N1,740,000
    • Cheque No. 4537 dated March 31, 2020, N3,670,000.

You are required to:
a. Prepare the adjusted cash book for the month of March, 2020. (9 Marks)
b. Prepare a statement on March 31, 2020, reconciling the bank statement balance with the adjusted cash book balance. (7 Marks)
c. Explain two reasons for preparing a bank reconciliation statement on a regular basis. (4 Marks)

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  • 1 Marks

FA – Nov 2022 – L1 – SA – Q15 – Bank Reconciliation

Identify the bank statement item that should not be adjusted in the cash book balance.

Which of the following bank statement items should NOT be added or subtracted from the cash book balance to determine the adjusted bank balance?
A. Bank service charges
B. Unpresented cheques
C. Direct transfer
D. Cash book error
E. Value added tax

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  • 1 Marks

FA – Nov 2022 – L1 – SA – Q5 – Bank Reconciliation

Identify the item that affects the cash book but is credited in the bank statement.

An item credited in the bank statement but yet to be recorded in the firm’s cash book is
A. Standing order
B. Direct transfer
C. Direct debit
D. Uncredited lodgements
E. Unpresented cheques

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  • 14 Marks

FA – Nov 2014 – L1 – SB – Q4b – Bank Reconciliation, Correction of Errors

Preparing cash book adjustments and reconciling the bank balance with the cash book.

On 30 June 2014, Maxwell’s cash book showed that he had an overdraft of N300,000 on his current account at the bank. The bank statement as at the end of June 2014 showed that Maxwell was in credit by N65,000.

On checking the cashbook with the bank statement, the following discrepancies were found:

i. Cheque drawn amounting to N500,000 had been entered in the cash book, but had not been presented.
ii. Cheque received amounting to N400,000 had been entered in the cash book, but had not been credited by the bank.
iii. On instructions from Maxwell, the bank had transferred interest of N60,000 from his savings account to his current account, recording the transfer on 5 July 2014. This amount had been posted into the cash book as at 30 June 2014.
iv. Bank charges of N35,000, shown in the bank statement, had not been entered in the cash book.
v. The payment side of the cash book had been under-cast by N10,000.
vi. Dividend received amounting to N200,000 had been paid directly to the bank and not entered in the cash book.
vii. A withdrawal of N50,000 from the savings account had been shown in the cash book as a drawing from the current account.
viii. A cheque for N25,000 issued to Jones over six months ago had been stale and was later replaced. It was entered again in the cash book, and no other entry was made. Both cheques were included in the total of unpresented cheques shown above.

Required:

i. Indicate the appropriate adjustments in the cash book. (8 Marks)
ii. Prepare a statement reconciling the amended balance with that shown in the bank statement. (6 Marks)
(Total 20 Marks)

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