Day: May 16, 2024

Which of the following statements about bank reconciliations are correct?

1. All differences between the cash book and the bank statement must be corrected by means of a journal entry.
2. In preparing a bank reconciliation, lodgements recorded before date in the cash book but credited by the bank after date should reduce an overdrawn balance in the bank statement.
3. Bank charges not yet entered in the cash book should be dealt, with by an adjustment to the balance per the bank statement.
4. If a cheque received from a customer is dishonoured after date, a credit entry in the cash book is required.

Select ONE answer:

1. Was credited to a non-current assets account
2. Was debited to the purchases account
3. Was debited to the equipment account
4. Was debited to the correct account but with the wrong amount

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Notcorrect
2. Correct – In preparing a bank reconciliation, uncredited lodgements reduce an overdrawn balance in the bank statement. If a cheque received from a customer is dishonoured after date, a credit entry in the cash book is required to reinstate the debt. Not all differences between the cash book and the bank statement must be corrected by means of a journal entry, since some items appear in the bank reconciliation only (eg errors by the bank, unpresented cheques and uncredited lodgements). Bank charges not yet entered in the cash book should be dealt with by updating the cash book, not by making an adjustment to the balance per the bank statement.
3. Not correct
4. Not correct

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