All 26 Bank Reconciliation questions
More in Bank Reconciliation
What is an outstanding lodgement (deposit in transit)? How is an overdrawn bank balance treated in a reconciliation? What is the adjusted (corrected) cash book balance? How often should bank reconciliations be performed? What is a standing order? 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? Which differences require an adjustment to the cash book and which do not?
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Bookkeeping › Bank Reconciliation

What is a direct debit and how does it appear in reconciliation?

Beginner

Answer

A direct debit is an instruction letting a supplier collect variable or fixed amounts from the business's bank account. It often appears first on the bank statement, so it must be entered in the cash book (credit bank, debit the relevant expense/payable) during reconciliation.
Utility direct debit 120: Cr Bank 120; Dr Utilities 120.
Real-world example A monthly insurance direct debit shows on the statement first and is then posted to the cash book.

Common follow-ups: Which record shows it first? | What entry updates the cash book?

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