Sage Bank reconciliation question

RobClarkeRobClarke Experienced MentorPosts: 820Registered
Completed a practice assessment for sage.

One of the questions was. "Reconcile the bank statement. If the bank statement does not reconcile check your work and make the necessary correction"

The question I have is, do you, when making corrections, have to make assumptions? For example, in a real life scenario I would imagine making calls to banks, double checking cheque books, paying-in books etc before making any corrections? I know in exam conditions you would not be able to do that, so would you make all necessary corrections for it to reconcile?

We have been advised by our tutor that we should not make corrections based on assumptions? She basically said that in real life the bank rec would rarely be zero and we are to click and use the ignore difference button?

Any suggestions would be gratefully received.

Comments

  • Diddy MauDiddy Mau Well-Known Posts: 238Registered
    Hi Rob

    if memory serves me right.

    The Adjustments will be a BP or BR missing, these will need to be entered before reconciliation. Alternatively an amount paid, might have the wrong amount entered in Sage. Adjust accordingly

    Hope this helps
  • coojeecoojee Experienced Mentor Posts: 794Registered
    RobClarke wrote: »
    Completed a practice assessment for sage.

    One of the questions was. "Reconcile the bank statement. If the bank statement does not reconcile check your work and make the necessary correction"

    The question I have is, do you, when making corrections, have to make assumptions? For example, in a real life scenario I would imagine making calls to banks, double checking cheque books, paying-in books etc before making any corrections? I know in exam conditions you would not be able to do that, so would you make all necessary corrections for it to reconcile?

    We have been advised by our tutor that we should not make corrections based on assumptions? She basically said that in real life the bank rec would rarely be zero and we are to click and use the ignore difference button?

    Any suggestions would be gratefully received.

    Your tutor told you to do that !!!!!!!!!!!!!!!!! I'm shocked, words fail me. This is someone who is being paid to teach you how to do it and they don't even understand the basics of a bank rec?

    The whole point of a bank rec is to prove that there are no errors in the cash book. The way to do this is to adjust the bank balance for timing differences and check that it comes back to the balance in the cash book. If it doesn't (ie there's a difference on the bank rec) then it means that there's an error which you have to find and correct.

    Consider an easy scenario, a cheque is issued on the last day of the month so that it's entered in the cash book but hasn't yet appeared on the bank statement. The amount in the bank was £1000 and the cheque is for £200. The balance on the cash book is £800 but the balance on the bank statement is still £1000 as the cheque hasn't appeared. The bank rec will say, balance per bank £1000 less O/S cheque £200 equals £800. As this agrees to the cash book we're know that we're OK. If however your cash book balance is something different to £800 then you can't ignore it. You have to find out why it's different and correct it. The usual error is that you have entered a reconciling item from last month in the cash book so that it's been counted twice, to avoid this error you should check that the opening bank and cash book balances agree.

    Sorry this is a bit garbled it's not something that can be explained in a quick e mail. Your tutor should know better.
  • RobClarkeRobClarke Experienced Mentor Posts: 820Registered
    We did a practice one the other week. There were three errors that we all identified, one was incorrect amount entered into drawings, one was a different amount recorded for bank charges, the last one was to do with a purchase of a pc printer that was entered as £108 including Vat but the bank statement showed it as £180. We were told that in real life we would not be able to correct them without further info (ie ring bank up, check hardcopy of receipt for printer etc etc) So we were told to force the rec through and click Ignore when the system said there was an inbalance?

    Thanks for you help, will try and decide before the exam if I should do what I know to be correct or to do it the way the tutor has shown us (the tutor will also be marking the exam?)
  • coojeecoojee Experienced Mentor Posts: 794Registered
    RobClarke wrote: »
    We did a practice one the other week. There were three errors that we all identified, one was incorrect amount entered into drawings, one was a different amount recorded for bank charges, the last one was to do with a purchase of a pc printer that was entered as £108 including Vat but the bank statement showed it as £180. We were told that in real life we would not be able to correct them without further info (ie ring bank up, check hardcopy of receipt for printer etc etc) So we were told to force the rec through and click Ignore when the system said there was an inbalance?

    Thanks for you help, will try and decide before the exam if I should do what I know to be correct or to do it the way the tutor has shown us (the tutor will also be marking the exam?)

    I'm laughing but it's not funny really. I can see where she's coming from in that you do need to double check that it's not the bank's mistake before correcting it. But you would never do the bank rec on sage with a difference showing, you would find and correct the differences first even if that meant not processing the bank rec until you'd cleared them up. In the exam you can always assume that the errors are to be corrected.
  • RobClarkeRobClarke Experienced Mentor Posts: 820Registered
    Not sure if we should laugh or cry to be honest - watch this space!
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