1. What is a bank reconciliation statement?

It is a statement prepared as on a particular date to reconcile the bank balance as per cash with balance as per pass book by showing all cases of difference between the two.

2. Explain why money paid to the bank appears on the debit of the bank statement.

When entries on a  bank statement are compared to those in the bank account it will be found that they are recorded on opposite sides of the account .The book account is a record of transactions as they affect business. Money pooled in to bank is debited and the money withdrawn is credited.

3. State the reason why the bank account and bank statement may differ.

Difference between two records occurs usually because of: 

•  The different times at which the same items are recorded.
• The business not recording certain items in the cash book.

4. Explain the item cheque not yet presented.

These are cheques that have been paid by the business and entered on the credit of the cash book, but which do not appear on the bank statement since the customer did not present the same in the bank for payment or cashed by customer.

5. What is amount not yet credited?

These are cash and cheques that have been paid into the bank and entered on the debit side of the cash book, but which do not appear on the bank statement, because the bank will credit the account only when the bank actually collects the payment of the cheques deposited with it.

6. What is bank charges and bank interest?

The bank may deduct an amount from the customer's account to cover  the cost of running the account. Bank interest is the interest charged for overdrafts and loans.

7. What is dishonoured cheques?

A cheque paid into the bank may be returned because the drawer did not have sufficient funds in the accounts. Such cheques are termed as dishonoured cheques.

8. What are the significance of bank reconciliation statement?

1) It shows the difference between bank balance as per the pass book and cash book.
2) It reduces the chance of committing fraud by staff dealing with cash.
3) It acts as a manual check of staff and people in the organization.
4) It help in finding out the actual position of bank balance.

9. What is over draft?

Over draft is the money withdrawn from bank account in excess of the money deposited in the bank.

10. Mention the differences between the bank account in the cash book and the bank statements.