Bank Reconciliation Technology by broverya72


									                 BANK RECONCILIATION
                 Tutorial Reference Sheet
Bank statement:
A document provided by the bank, generally monthly, that summarizes the depositor's banking

Debits and credits:
In reconciling a bank statement, debits and credits appear to be "backwards" from an accounting
perspective. To the bank, an amount on deposit in a customer's account is money owed by the
bank to the customer; therefore it is a liability. When anything is deposited to a customer's
account it is said to be a credit, an increase in what the bank owes the customer, or an increase
in a liability. When anything is deducted from a customer's account it is a debit, as it is a reduction
in the bank's liability to the customer.

Bank reconciliation:
A means of determining the actual cash position by comparing the balance and contents shown
on the bank statement with the depositor's record.

Cancelled cheques:
Cheques paid by the bank, deducted from the customer's bank account, and stamped to show
they have been paid.

Outstanding cheques:
Cheques written by the depositor, deducted in the cash records, but not yet processed by the

Deposit in transit:
Cash or cheques entered to company records and sent to the bank for deposit, but not yet
processed by the bank.

Electronic funds transfer:
The transfer of cash from one location to another by way of computer or telephone.

Post dated cheque:
A cheque that is written and presented to the payee, but dated at some time in the future.
Stale dated cheque:
A cheque that us dated at least six months prior to being presented at the bank for payment.
Generally it is no longer honoured.

NSF cheque:
Means nonsufficient funds. A customer's cheque is returned by the bank and charged back to
your account due to lack of funds in the account on which the cheque was written.

Bank service charge:
An amount charged by the bank for services provided. It is usually charged on a specific date
each month and the amount must be adjusted as a debit to bank service charge and a credit to
your cash account when the bank reconciliation is done.

Interest earned:
Some bank accounts earn interest on the amount that is on deposit. This amount is reported on
the monthly bank statement.

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