All 26 Bank Reconciliation questions
More in Bank Reconciliation
What is a credit transfer (bank giro) received? What documents are needed to perform a bank reconciliation? What does 'reconciling item' mean? What are the steps to prepare a bank reconciliation? How does a bank reconciliation help detect fraud or error? What causes a bank reconciliation not to balance and how do you investigate? How do bank errors feature in a reconciliation? How do you reconcile when starting from the cash book balance instead of the statement? What is the correct order: update the cash book first or reconcile the statement first? How does electronic/online banking change the reconciliation process?
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Bookkeeping › Bank Reconciliation

Which differences require an adjustment to the cash book and which do not?

Intermediate

Answer

Items known only to the business until the statement arrives—bank charges, interest, direct debits, standing orders, dishonoured cheques, and bank errors affecting the cash book—require updating the cash book. Pure timing differences—unpresented cheques and outstanding lodgements—do not; they self-correct and only appear in the reconciliation statement.
Real-world example Bank charges are entered in the cash book, but an unpresented cheque is only listed in the reconciliation.

Common follow-ups: Do timing differences need a cash book entry? | Give examples that update the cash book.

Cash Book & Petty Cash Correcting Errors Bank Reconciliation
All 26 Bank Reconciliation questions