Notes

Chapter 4

BANK RECONCILIATIONS
Two records of cash
1. T- accounts
2. Bank Statements


keeping track of cash needs to be very high priority
Companies need two records of cash:
T-accounts and Bank Statement
Theoretically T-accounts and Bank statements should match up but they almost never are.
Reasons they are different:
1.The bank doesn't always find out about checks in the T-account right away. (outstanding check)
2. Money comes in and you Debit cash but bank won't know until you deposit. (Deposit in Transit or Outstanding deposit)
3.Bank charges- companies don't know Bank Charges until they come

NSF check- non sufficient funds

Banks reconciliations are about accountants explaining the differences between T-accounts and Banks statements to know where their money is going and where it is coming from


Bank reconciliation
Balance per bank top left heading
Balance per books top right heading
listing what we think the bank messed up
list what we think we messed up
Bank:
outstanding cheques (find missed ones)
total of missed bank statements on bottom left
total of missed bookkeeping on the right
they should be the same
record journal entries required to fix book keeps account


Class:
-Cash is King