Match each bank reconciliation item on the left to its correct accounting treatment on the right.
- Dividends collected directly by the bank on behalf of the enterpriseDebited to the Adjusted Cash Book (increasing cash book balance)
- Standing order payment for insurance executed by the bankCredited to the Adjusted Cash Book (reducing cash book balance)
- Cheque drawn and issued to a creditor but not yet presented to the bankIncluded in the Bank Reconciliation Statement as an unpresented cheque
- Cheque paid into the bank account but not yet credited by the bankIncluded in the Bank Reconciliation Statement as an uncredited deposit
Answer
Dividends collected directly by the bank are debited to the Adjusted Cash Book; standing order insurance payments are credited to the Adjusted Cash Book; unpresented cheques are reported in the Bank Reconciliation Statement as unpresented cheques; and uncredited deposits are reported in the Bank Reconciliation Statement as uncredited deposits.
Items omitted from the cash book (such as direct dividends received and standing order payments) must be adjusted directly in the Cash Book to reflect the true updated balance. Direct receipts are debited to increase the balance, while standing order payments are credited to reduce the balance. Conversely, items already recorded in the cash book but not yet cleared by the bank (unpresented cheques and uncredited deposits) are timing differences that belong exclusively in the Bank Reconciliation Statement.
Step-by-Step Solution
Key Concept
Distinction between unrecorded cash book transactions and timing differences