Topic: Bank reconciliations

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

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

Question

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:

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.
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.
The bank made e-payment charges of N50,000 on the company’s account.
The receipt side of the cash book was overcast by N100,000 by the account clerk.
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.
E-dividend payments made through the bank by the company amounting to N360,000 were yet to be posted in the company’s cashbook.
A cheque issued for the purchase of office equipment had been entered in the bank statement as N800,000 instead of N300,000.
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)

Answer

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Tags: Bank Reconciliation, Cashbook, Day-to-day Banking
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2012

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

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

Question

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

Answer

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Tags: Bank Reconciliation, Source Documents
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2011

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

Determines the correct overdraft position after reconciling bank errors.

Question

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

Answer

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Tags: Bank Reconciliation, Error Correction, Overdraft Position
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2020

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

Identify items required for cash book adjustment during bank reconciliation.

Question

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?

Answer

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Tags: Bank Reconciliation, Cash Book Adjustments, Financial Statements
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2012

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

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

Question

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

Answer

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Tags: Bank Statement, Cash Book, Discrepancy, Reconciliation
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2012

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

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

Question

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

Answer

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Tags: Minimum Payments, Revenue Recognition, Royalty Accounting
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2014

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

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

Question

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?

Answer

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Tags: Bank Reconciliation, Cash Book Adjustment, Financial Statements
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2014

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

Defines unpresented cheques in accounting.

Question

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

Answer

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Tags: Bank Reconciliation, Cash Book Adjustments, Unpresented Cheques
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2014

FA – Nov 2015 – L1 – SB – Q5c – Bank Reconciliation

Reconcile accounts receivable ledger control with ledger balances and clear the suspense account.

Question

The trial balance of Mbobo Limited includes the following items:

The following information is available:

The total of debit balances in the accounts receivable ledger is ₦116,374, and the total of credit balances is ₦1,234.
The accounts receivable ledger includes a debit balance of ₦700 for Entity C, and the accounts payable ledger includes a credit balance of ₦800 relating to Entity C. Only the net amount will eventually be paid.
Included in the credit balances in the accounts receivable ledger is a balance of ₦600 in the name of H. Potoka. This arose because a sales invoice for ₦600 had earlier been posted in error from the sales day book to the debit of the account of M. Potoka in the accounts payable ledger.
An allowance of ₦300 granted to a customer for some damaged goods had been omitted from the appropriate account in the accounts receivable ledger. This allowance had been included in the accounts receivable control account.
A cash receipt from a credit customer for ₦345 had been entered in the cash book as ₦245.
The bank balance of ₦1,700 had been included in the trial balance, in error, as an overdraft.
The debit balance on the insurance account in the nominal ledger of ₦3,456 has been included in the trial balance as ₦3,546.

Required:
(i) Prepare a reconciliation of the accounts receivable ledger control account and the accounts receivable ledger balances (8 marks).
(ii) Open a suspense account and post the entries required to clear this account (2 marks).

Answer

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Tags: Accounts Receivable, Control Accounts, Reconciliation, Suspense account
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2015

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

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

Question

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)

Answer

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Tags: Adjustments, Bank Statement, Cash Book, Reconciliation
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2015

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

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

Question

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

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.
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.
The bank made e-payment charges of N50,000 on the company’s account.
The receipt side of the cash book was overcast by N100,000 by the account clerk.
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.
E-dividend payments made through the bank by the company amounting to N360,000 were yet to be posted in the company’s cashbook.
A cheque issued for the purchase of office equipment had been entered in the bank statement as N800,000 instead of N300,000.
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)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bank Reconciliation, Cashbook, Day-to-day Banking
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2012

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

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

Question

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

Answer

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Tags: Bank Reconciliation, Source Documents
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2011

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

Determines the correct overdraft position after reconciling bank errors.

Question

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

Answer

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Tags: Bank Reconciliation, Error Correction, Overdraft Position
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2020

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

Identify items required for cash book adjustment during bank reconciliation.

Question

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?

Answer

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Tags: Bank Reconciliation, Cash Book Adjustments, Financial Statements
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2012

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

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

Question

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

Answer

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Tags: Bank Statement, Cash Book, Discrepancy, Reconciliation
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2012

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

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

Question

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

Answer

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Tags: Minimum Payments, Revenue Recognition, Royalty Accounting
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2014

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

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

Question

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?

Answer

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Tags: Bank Reconciliation, Cash Book Adjustment, Financial Statements
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2014

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

Defines unpresented cheques in accounting.

Question

Answer

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Tags: Bank Reconciliation, Cash Book Adjustments, Unpresented Cheques
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2014

FA – Nov 2015 – L1 – SB – Q5c – Bank Reconciliation

Reconcile accounts receivable ledger control with ledger balances and clear the suspense account.

Question

The trial balance of Mbobo Limited includes the following items:

The following information is available:

The total of debit balances in the accounts receivable ledger is ₦116,374, and the total of credit balances is ₦1,234.
The accounts receivable ledger includes a debit balance of ₦700 for Entity C, and the accounts payable ledger includes a credit balance of ₦800 relating to Entity C. Only the net amount will eventually be paid.
Included in the credit balances in the accounts receivable ledger is a balance of ₦600 in the name of H. Potoka. This arose because a sales invoice for ₦600 had earlier been posted in error from the sales day book to the debit of the account of M. Potoka in the accounts payable ledger.
An allowance of ₦300 granted to a customer for some damaged goods had been omitted from the appropriate account in the accounts receivable ledger. This allowance had been included in the accounts receivable control account.
A cash receipt from a credit customer for ₦345 had been entered in the cash book as ₦245.
The bank balance of ₦1,700 had been included in the trial balance, in error, as an overdraft.
The debit balance on the insurance account in the nominal ledger of ₦3,456 has been included in the trial balance as ₦3,546.

Answer

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Tags: Accounts Receivable, Control Accounts, Reconciliation, Suspense account
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2015

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

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

Question

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)

Answer

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Tags: Adjustments, Bank Statement, Cash Book, Reconciliation
Level: Level 1