Documentation of Bank Balance and Book Balance DifferencesWhen any of these differences have already been recorded in the company’s records but not those of the bank, they are itemized as reconciling items on the bank reconciliation. Examples are outstanding checks and deposits in transit. Outstanding checks are listed as a deduction from the bank balance, while deposits in transit are added to the bank balance. When any of these differences are listed on the bank statement, they should be recorded on the books of the company, using journal entries. Examples of items to be entered in this way are the interest on deposited cash, bank service fees, check printing charges, and company recordation errors. Reasons a Bank Balance Will Differ from a Company's BalanceSome of the reasons for a difference between the balance on the bank statement and the balance on the books include:
How to Document the DifferencesAny items that are already recorded in the company's general ledger accounts, but have not yet appeared on the bank statement (outstanding checks, deposits in transit), will be noted as an adjustment to the balance per bank statement. Outstanding checks are a deduction to the balance per bank; deposits in transit are an addition to the balance per bank. If an item is on the bank statement but has not yet been entered on the books, the items are noted as an adjustment to the balance per books. Bank service charges, check printing charges, and other electronic deductions that are not yet recorded in the company's accounts will become deductions from the cash balance per the books. Electronic deposits not yet recorded by the company will become additions to the cash balance per books. 32) A good internal control system would require that the employee who handles cash must not beinvolved in:A) Reconciling the bank statement.***B) The accounts payable function.C) Hiring decisions.D) Daily operations of the company. 33) Which of the following is correct with respect to a bank reconciliation? Get answer to your question and much more 34) After preparing the bank reconciliation, an NSF check would result in which of the following whenrecording the adjustment to the company's cash balance? Get answer to your question and much more 35) The following information pertains to a company's cash balance and bank reconciliation as of August31:Company balance before reconciliation$5,000Checks outstanding$2,500Notes collected by the bank$2,200Service fee$50Deposits outstanding$2,000What is the correct cash balance for the company? Get answer to your question and much more What would cause the balance of cash in the bank statement not to equal the balance of cash in the accounting records?Discrepancies between the two records may be caused by: Deposits in transit: Cash or checks may have been received by the business but not yet recorded by the bank. Outstanding checks: Outstanding checks are those that have been issued but not processed. Bank service fees: Banks deduct service charges regularly.
What would cause a bank statement not to agree with the cash balance?Outstanding checks. Deposits in transit. Bank service charges and check printing charges. Errors on the company's books.
What causes the balance on the bank statement to differ from the cash balance in the accounting records quizlet?The primary reason the balance of cash in the company's records will differ from the balance of cash in the bank's records includes: Timing differences of recording cash transactions by the company and by the bank.
Which of the following items would cause cash per the bank statement to be larger?Answer and Explanation: C) Outstanding checks would cause the ending balance on the bank statement to be larger than the ending balance of cash shown in the accounting records.
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Which of the following items would cause the balance of cash in the bank statement not to equal?
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