Reconciling A Bank Account Revision Questions

Reconciling A Bank Account Revision Questions

1)  Which one of the following describes the process of checking the relationship between your Bank account and the Bank Statement?

1. Appropriation
2. Conciliation
3. Reconciliation
4. Assessment

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2)  Which one of the following explains why your Bank Statement may differ from your Bank account?

1. The Bank has included transactions that you did not know about
2. You have included transactions that the Bank did not know about
3. The Bank can make mistakes
4. All of the above

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3)  Your Bank account is an Asset, but money in the account is shown as a credit in the Bank Statement.  Which one of the following describes why this is so?

1. Money in the bank is a liability to you
2. The bank uses different accounting proceedures
3. The bank has made a mistake
4. Your money in the bank is a liability to the bank

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4)  The Bank Statement is a version of your account seen from the Bank's perspective.

1. True
2. False

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5)  You buy goods for £400 and pay by cheque.  You lodge a customer cheque for £500.  Which one of the following describes the entries in the Bank Statement correctly?

1. £400 debit and £500 credit
2. £400 credit and £500 debit
3. £900 debit
4. £900 credit

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6)  Which one of the following will appear on the credit side of the Bank Statement?

1. The Bank pays a Standing Order
2. The Bank levies interest charges
3. Your customer pays an invoice directly into your account at the bank
4. Your pay for goods by cheque

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7)  Which one of the following will appear on the credit side of YOUR Bank account?

1. You withdraw money
2. You sell goods
3. The Bank pays interest on your Deposit account
4. You buy goods on credit

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8)  Which one of the following might the bank not know about when preparing your Bank Statement?

1. A Standing Order to pay your mortgage
2. A Direct Debit to pay your electricity bill
3. A cheque you wrote to pay a supplier
4. Bank charges

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9)  Since the Bank Statement is a version of your account seen from the Bank's perspective the balance in both must be the same.

1. True
2. False

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10)  The balance in your Bank account and Bank Statement after the last reconciliation was £10,000 debit and credit respectively.  You then receive a cheque for £1,300 and lodge it.  You pay your suppliers with cheques of £400 and £500.  When the next statement arrives, your suppliers have not cleared the cheques and the bank has levied £10 in bank charges.  What is the difference between the debit balance in your Bank account and the credit balance on the Statement?

1. £910
2. £890
3. £1,290
4. £1,310

Answer

Reconciling A Bank Account Revision Answers

1)  Option (c) is correct.  The process is referred to as Bank Reconciliation.  It is also referred to as 'reconciling the bank'.

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2)  Option (d) is correct.  Your account will rarely be the same as the Bank Statement mainly for the first two reasons.  You and the Bank can also make mistakes.

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3)  Option (d) is correct.  The money that you lodge into the bank must be kept safely for you.  Therefore from the bank's point of view, you are a liability - they owe you money.  Lodgements will be shown on the credit side of your Bank Statement.  Your own accounts view this in the opposite way.  A lodgement is an asset and is recorded on the debit side of your own account.

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4)  Option (a) is correct.  This is true.  All transactions that the bank is aware of, are listed in the Bank Statement.  However, at any given time, they may not know about some cheques that you have written, or some lodgements that you have made, and so it may not be the same, as your own account.  Hence, you will need to perform a reconciliation.

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5)  Option (a) is correct.  Payments are shown as debit entries in the Bank Statement.  Lodgements are shown as a credit.

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6)  Option (c) is correct.  This is a lodgement and it increases your money in the bank and is, therefore, on the credit side of the Statement.

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7)  Option (a) is correct.  Money taken out of YOUR Bank account is shown on the credit side of the account.

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8)  Option (c) is correct.  All others are transactions that the bank carries out and will, therefore, know about them.

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9)  Option (b) is correct.  This is false.  The bank may not know about some cheques you have written or some lodgements you have made.

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10)  Option (b) is correct.  The £1,300 has been cleared and will be shown on both the account and the statement.  The payments of £900 will not appear on the statement, and the £10 charge will not appear on the account.  The balance in your account will be £10,400 debit, and the balance on the statement will be £11,290 credit.

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