(a) Bank Reconciliation Statement: it is a statement prepared by a bank's current account holder on receipt of a bank statement. It is prepared to bring the firm's cash book (bank column) balance into an agreement with its bank statement balance.
(b) Reasons for preparing a bank reconciliation Statement: They are prepared in order to
i. ensure that individual payments and receipts on the bank statement are reflected in the bank column of the cash book.
ii. arrive at a basis for making any correction in the bank column of the cash book and the bank statement balance at a particular date.
iii. reconcile the balance per bank statement with the balance in the firm's cash book at a particular date
v. explain any difference between the balance as per the bank column of the cash book and the bank statement balance
(c) i. Unpresented Cheques
- These are cheques already issued by a current holder to a named beneficiary and credit to the cash book.
- The named beneficiary is yet to take the cheque(s) to the bank for payment.
ii. Standing Order
- It is an instruction from a customer of a bank to his banker
- The banker is directed to make certain regular payments out of his account to named persons or organizations.
iii. Credit Transfer
-These are payments made directly into a customer's account in the bank.
- They are made by third parties.