Bank statement
Document produced by the bank which shows the cash held by a business with the bank. It lists the
deposits, withdrawals and balance of the business's bank account over a stated time period usually one
month.
Bank reconciliation statement
This document brings into agreement the balance of the business's bank account with the bank's
records of the business's account, after all outstanding transactions have been taken into consideration.
Unpresented cheques
Cheques which have been drawn on the business's account but which have not yet been presented at
the bank for payment. The bank statement shows only those cheques it has honoured (ie paid).
Night safe deposits
Deposits made by the business at night to the bank. These items are usually not recorded by the bank at
the end of the month.
EFT items
Electronic funds transfers may be received or paid electronically (directly) into or out of the business's
bank account.
Bank charges
When the bank has transactions with the business, various bank fees can apply. These include fees for
account keeping, merchant services (bankcard/visa transactions) and fees for the use of EFTPOS
facilities. These are shown in the bank statement in the debit column.
Direct deposits
The business can authorise the bank to accept deposits on its behalf. Only whent the bank statement is
issued does the business receive confirmation of the increase in its deposits. Rent Revenue is commonly
deposited directly inot the business's bank account.
Interest revenue
Interest earned by the business for money invested in the bank. Usually earned through a cash
management account or term deposits. This is shown in the bank statement in the credit column.
Dishonoured cheques
These are cheques that have been deposited by the business into its bank account and recorded through
the CRJ as a deposit. However, due to insufficient funds in the customer's bank account these cheques
are returned to the business without the funds being deposited into the bank account. Additional
charges apply when cheques have insufficient funds.
Business errors
These are errors made by the business in recording its receipts or payments in the Cash Receipts Journal
or the Cash Payments Journal. These errors are corrected by reversing the incorrect amount and reentering the correct entry into the appropriate journal.
Bank errors
These are errors made by the bank and can include overcharging of fees, entering incorrect amounts for
deposits or cheques. The bank needs to be notified of these errors and an adjustment made in the Bank
Reconciliation Statement until the error has been confirmed and corrected.
Overdraft
When the business's bank statement shows a Debit balance. This means the business is now an asset to
the bank because it owes the bank back the money it has overdrawn its account by.
Final balance
When preparing the bank reconciliation statement this figure from the bank statement is used as the
first entry.
Added
If the bank statement shows an overdraft then this will be done with unpresented cheques in the bank
reconciliation statement.
Asset
From the business's point of view money in the bank represents this.
Liability
From the bank's point of view money the business has in the bank represents this.
Credit column
Deposits recorded in the cash receipts journal are checked with this column in the bank statement.
Debit column
Cheques recorded in the caspayments journal are checked with this column in the bank statement.