Bank

Reconciliation
Presented by:
Grace Villamora
Objectives:
01 Identify and differentiate the types
of bank accounts usually
maintained by a business

02 Prepare bank deposit and

withdrawal slips;

03 Describe the nature of bank

reconciliation
 Cash, Nature, and Composition

Generally, the meaning of cash is coins and currency.

But in accounting, cash is defined as “currency or cash items
on hand, such as cash items awaiting deposit and cash in the
working funds, as well as peso or foreign currency deposits in
bank which are unrestricted and immediately available for use
in the current operation” (Frias and Kemie, 2010)

Cash items include Bank accounts may be Working funds include

1. coins; 1. Savings accounts; 1. Petty cash fund;

2. current checks; 2. Checking and current account; and 2. Change fund; and
3. Bank drafts; and 3. Time deposit 3. Revolving fund.
4. Postal money orders
 Savings account is one where a passbook is presented
for cash deposits and cash withdrawals.

 Checking or current account is one where drawings are

done by the writing of checks, signing in the same, and
giving check to the payee for encashment or for deposit
within a bank.

 Combo account is a combination of savings and current

account.
Terminologies and Concepts Relevant to Bank Reconciliation
1. Bank reconciliation is a process of bringing into agreement the bank balance per
bank and the bank balance per record of the depositor.
2. Bank balance is the balance reported by the bank as of a specific date.
3. Book balance or check stub balance is the balance reported by the depositor as of
a specific date.
4. Check is the bank instrument used to withdraw cash from a checking account.
5. Drawee bank is the bank against which a check withdrawal is addressed.
6. Drawer is the signor of withdrawal check or the party giving the order to pay.
7. Payee is the person or entity to whom payment is to be made.
8. Endorsement is the process of transferring the right to withdraw cash in favor of
an endorser signed by the endorser.
9. Bank signature card is a bank record showing the specimen signature of the bank
depositor.
10.Bank statements are reports from the bank to the client, showing addition to and
deduction from bank balance for a period of time.
11. Cash book is the record of the bank depositor or bank client showing deposits to and
withdrawals and the end of period balance for a certain period of time.
12. Check stub is a bank form attached to the blank checks for use of the depositor for
immediate posting of transactions with the bank.
13. Deposit in transit is bank deposits reflected in the record of the depositor, but is not yet
reflected in the record of the bank.
14. Outstanding Checks are checks drawn by the depositor and posted as reduction in the
depositor’s records, but is not yet posted as reduction from the depository bank’s record.
15. Automated teller machine is an offsite equipment that enables the bank client to deposit
and withdraw cash from their account.
16. ATM cardAdd is Text
an ID sized card that is used to activate the automated teller machine. Add Text
Simple PowerPoint Simple PowerPoint
17. Electronic Payment
Presentation
System (EPS) is one where, with the use of an ATM card, payments
Presentation
are made without using coins, paper bills, nor checks.
18. Bank Debit Memo (DM) is a bank form and entry for bank balance deduction initiated by
the bank other than checks.
19. Bank Credit Memo (CM) is a bank form and entry for bank balance addition initiated by the
bank other than checks.
20. Check Writer is a machine used to write information on disbursement checks.
21. Signature Plate is a metal gadget attached to an equipment to stamp the signature of a check
sign or on a check.
22. Internal Control is a plan of organization and all the coordinate methods and measures that are
designed
(a) to safeguard assets
(b) to check the accuracy and reliability of accounting data
(c) to promote operational efficiency
(d) to encourage adherence to prescribed managerial policies.
23. Imprest System is an internal control system where all cash collections are deposited with the
bank and all payments are made by checks except for small payments which are paid from the petty
cash fund.
24. Petty Cash Fund is an amount in coins and currency held by the petty cash custodian for small
cash payments that cannot be conveniently paid by checks.
 Cash Balance Per Bank versus Per Book
 Cash transactions are recorded as they occur. The depositor dates book entries when cash is received,
as evidenced by the official receipts dates, and when cash is paid as evidenced by check voucher and
check dates.
 The depository bank records deposits when cash or check deposits are received from the depositors, and
records check drawn when checks are presented for payment by the payees.

At the end of the reporting period, usually a calendar month, thebank issues a bank statement to the client
depositor. The bank statement shows the following:

1. Name of the bank

2. Reporting period
3. Name of client-depositor
4. Beginning peso balance
5. Deposits and other increases
6. Withdrawals and other decreases
7. Ending balance
 The objective of the bank reconciliation is
to identify differences between the book and
the bank to enable the depositor to make
entries for identified differences called
reconciling items. This is also to bring to the
bank’s attention those reconciling items that
need to be corrected or adjusted in the bank’s
records.
Steps in Bank
Reconciliation
 Steps in Bank Reconciliation
Steps in reconciling general ledger cash in bank balance with bank statement balance are as follows:

1. Use the pro forma bank reconciliation:

Balance per ledger (Date-End of Ledger) P XXX

Add: Deposit per bank statement not yet in

the ledger XXX

Less: Withdrawals per bank statement not

yet in the ledger (XXX)
Adjusted ledger balance P XXX
 Ledger is also referred to as book.

Balance per bank statement (Date- End of Statement) P XXX

Add: Deposits per ledger not yet in the

bank statement XXX

Less: Withdrawals in the ledger not yet in the

bank statement (XXX)
Adjusted bank statement balance P XXX

2. Trace deposits per bank statement to deposits per cash receipt book and to prior
month bank reconciliation. Tick or mark traceable items. Leave the untraceable items unmarked.

3. The untraceable deposit items are grouped into

a. Deposits per bank statement not in the ledger and
b. deposits per ledger not in the bank statement.
4. Trace withdrawals per bank statement to withdrawals per ledger and to prior month bank reconciliation.
Tick or mark traceable items. Leave the untraceable items unmarked. The untraceable withdrawal items are
grouped into
a. Withdrawals per bank statement not in the ledger and
b. Withdrawals per ledger not in the bank statement.
5. For step 1, fill in the form. Write the ledger ending balance and the bank statement ending balance.
6. Also in step1, fill in the untraceable deposits in step 3, and the untraceable withdrawals in step 4.
7. From the prior moth bank reconciliation, copy and write in the current month bank reconciliation those
reconciling items for deposits and those reconciling items for withdrawals that remain untraceable or that
remain as open items.
8. Identify debit postings the general ledger cash in bank account coming from the general journal. Trace them
to the prior month reconciling items and to the additions in the current month bank statement. Nontraceable
debit postings are listed as additions in the ledger, but are not yet added in the bank statement.
9. Identify the credit posting in the general ledger cash in bank account coming from the general journal.
Trace transaction to the prior month, reconciling items and to the deduction in the current month bank
statement. Non traceable credits postings are listed as deductions in the ledger that have yet to be
deducted from the bank statement.
10. Do the arithmetical processes as shown in the pro forma bank reconciliation in step 1.
11. At this point, the adjusted balance per ledger should equal the adjusted balance per bank
statement.
 References
• https://accounting-simplified.com/financial/bank-reconciliation/
• https://www.bankrate.com/banking/what-are-the-different-types-of-bank-accounts/
Thank You