Bank Reconciliation Statements

A bank reconciliation statement is a statement which . . .

• is sent by banks to their customers.

• is sent by banks to any of their customers who exceed their agreed credit limit with the bank.

• explains the difference between the bank balance shown in a firm's accounting records and that shown on its bank statement.

• None of the above.

The purpose of a firm preparing a bank reconciliation statement is . . .

• to ascertain the amount of financing, if any, which it may require in the future.

• to ascertain whether bank charges have been correctly calculated by the bank.

• to ascertain whether the correct amount of interest has been paid to the firm by the bank on all money on deposit.

• to reconcile the bank balance in the firm's accounting records at a particular date with that shown on its bank statement at the same date.

A bank reconciliation statement is . . .

• part of the double-entry accounting records.

• not part of the double-entry accounting records.

• prepared by a firm and then sent to its bank.

• posted to the nominal (general) ledger.

A cheque which was issued by a firm and sent to one of its creditors has not yet appeared on the firm's bank statement. This cheque is known as . . .

• a standing order.

• a dishonoured cheque.

• a credit transfer.

• an outstanding cheque.

The figure for 'bank' which should be shown in a firm's balance sheet at any particular date is . .

• the balance, at that date, as shown by the firm's bank statement.

• the balance, at that date, per the firm's bank nominal (general) ledger account.

• the reconciled bank balance at that date.

• None of the above.

The total of cheques issued during the last six months which, at the date on which a bank reconciliation statement is prepared, have not been shown on the bank statement . . .

• should be included in the bank reconciliation statement.

• should be shown in the balance sheet under the heading 'accruals'.

• should be cancelled.

• are 'stale' cheques.

Which of the following will not give rise to a difference between the balance shown on a firm's bank statement and that shown, at the same date, in its nominal (general) ledger account for bank ?

• Errors made by the firm's bank.

• Cheques written by the firm which have not yet appeared on its bank statement.

• Lodgements made by the firm which have not yet appeared on its bank statement.

• None of the above.

If cheques totalling £12,000 sent by a firm to its creditors during an accounting period have not been presented at a bank by the end of that period, then, at that date, on the basis of the above information only . .

• the firm is owed £ 12,000 by its bank.

• the bank balance shown in the firm's nominal (general) ledger is overstated by £12,000.

• the balance shown on the firm's bank statement is £12,000 greater than the amount the firm has available to it from that bank account.

• the firm owes its creditors £12,000 more than the amount which will be shown for creditors in its balance sheet.

On 31 March the balance brought down on a firm's bank account in its ledger was £3,600, credit. At the same date, outstanding cheques amounted to £1,400 and outanding lodgements amounted to £2,000. A cheque for £500, received from a debtor, was subsequently dishonoured. The receipt of the cheque had been correctly recorded but no entry has yet been made in the accounting records in respect of it being dishonoured. On the basis of the above information, the balance on the firm's bank statement at 31 March was:

• £3,500 credit

• £3,700 credit

• £4,200 overdrawn

• £4,700 overdrawn

At 31 December the balance on a firm's bank statement was £1,000 overdrawn. At the same date, outstanding cheques amounted to £3,000, outstanding lodgements amounted to £5,000 and there was a dishonoured cheque from a customer of £500 entered on the firm's bank statement but not yet entered in the bank account in the firm's ledger. The balance brought down on the bank account in the firm's ledger was:

• £500 debit

• £500 credit

• £1,000 credit

• £1,500 debit