bank reconciliation

caroline23

im onto BA2 on bank reconciliation statements and getting a bit muddled, could anyone explain it to me
like why certain things are missed out when updating cash book? ive also noticed the balance brought
forward on the bank statement differs to that of the cash book, but then it says they should balance?

any help greatly appreciated

Louise89

That is part of the bank rec, you have got to find the difference in order to make it balance.

Donna Curling

Not sure why the balance brought forward would not balance - a little confused on this one as a reconcile prior to b'forward would have made the items match.
to find differences eliminate what does match - mark on both statement and cash book matching items.
This will highlight omitted items:
Items on bank statement not on cash book - enter them into cash book
Items on cash book not on bank statement - these should be a point in time difference (cheques issued not banked etc) and therefore are you reconciling items.
hope helps - Donna

coojee

Donna Curling wrote: »

Not sure why the balance brought forward would not balance - a little confused on this one as a reconcile prior to b'forward would have made the items match.

Items on cash book not on bank statement - these should be a point in time difference (cheques issued not banked etc) and therefore are you reconciling items.
hope helps - Donna

It's these last items which will mean that the b/f bank balance won't agree to the b/f cash book balance. At the end of last month you had a reconciliation that said balance per bank £100 less outstanding cheque (in cash book but hasn't appeared in bank yet) £20 = Balance per cash book £80. At the start of the following month the b/f cash book balance is £80 and the b/f bank balance is £100. Normally you'll then see last months O/S cheque in the bank so you ignore it this month as it was included last month. Difficult to explain in words, much easier on paper.