2. leARNiNg oBjectives
Explain bank facilities
Differentiate Cash Book balance and Bank Statement
balance
Explain the importance of a Bank Reconciliation
Statement
Prepare the Bank Reconciliation Statement
3. BANK fAcilities
• Bank plays the role of financial institution that gives
monetary services.
• In Malaysia there are there are local and international banks
as follows;
Banks In Malaysia
- Maybank
- Bumiputera Commerce (CIMB)
- Southern Bank (CIMB)
- Public Bank
- EON Bank
- Alliance Bank
- Affin Bank
- RHB Bank
- Bank Simpanan Nasional
- Bank Rakyat
- HSBC
- Citibank
- Standard Chartered
- United Overseas Bank
- OCBC Bank
4. BANK fAcilities cont…
• Bank Accounts
ACCOUNTS
Saving AccountCurrent Account
- This account is used for saving
purposes and common for
anybody
- The flow of money in and out is
unexpected.
- No overdraft services
- Used for regular bank in and
withdrawal of money and cheque
services
- This type of account allowed
overdraft (more money taken out
than has been put in ) facilities.
- Normally, bank will ask for
advance money in agreement to
give ‘overdraft’ services.
Deposit Account
- This account is normally money
paid into the account will remain
there for some time and that
withdrawals will be ‘infrequent’ .
- Interest will be paid by the bank
on the account balance , that is
much more higher than saving
and current account .
Normally,
business will open
this type of
account, mainly
for cheque and
overdraft services
5. BANK fAcilities cont…
• Method of payments
- Cheque payment
- Credit Transfer
- Standing Order
- Direct Debit
6. Cash book and bank
statement balanCes
• Cash Book
– In a business, Cash Book will record all the funds in and out of
a business.
– Sometimes, there is situation where transaction happened in
Bank Statement does not same with business’s Cash Book.
7. Cash book and bank
statement balanCes
cont…• Bank Statement
– At the end of every month, bank will send a copy of Current
Account transactions to its customers. This copy is called as
Bank Statement.
– This immediate bank statement could help owner of a business
to update their Cash Book.
8. Cash book and bank
statement balanCes
cont…• What may cause the differences in Cash Book and Bank
Statement?
Differences
Cash Book items are not
listed in Bank Statement
Bank Statement items are
not listed in Cash Book
- Cheque paid to creditor still not
represented in bank
-Cheque received from debtor still
not represented in bank
-Bank credit (income) some amount
in business account
-Bank debit (expenses) some amount
in business account
- Dishonoured cheque
9. ImportanCe of bank
reConCIlIatIon
statement• Bank Reconciliation is prepared by owner if he/she
found out that the balances in Cash Book and Bank
Statement are different.
• This bank statement can control;
– Cash losses in business; stolen or misused
business money
– Business activities such as the bill payments and
can avoid late or advance payments
– Excess cash can be invested to earn extra revenue
rather than having it on hand
10. FORMAT OF BANK RECONCILIATION STATEMENT
Balance per Cash Books (Dr) x
Add: Unpresented cheques x
Interest earned x
XX
Less: Bank Lodgements not on statement (x)
Less: Bank Service Charges (x)
Add/Less Errors in company’s cash account (x)
Balance per Bank Statement (Credit) XX
RM
Bank Reconciliation Statement as at …….
(i) Statement that starts from debit balance of cash book
11. FORMAT OF BANK RECONCILIATION STATEMENT
Balance as per Bank Statement (Cr) x
Add: Bank Lodgements not on statement x
Bank Service Charges x
XX
Less: Unpresented cheques (x)
Balance per Cash Book (Debit) XX
Bank Reconciliation Statement as at …….
(ii) Statement that starts from credit balance of bank statement(ii) Statement that starts from credit balance of bank statement
RM
12. PreParation of
reconciliation
Statement
STEP 1: Compare the items from debit side of Cash Book
and items in credit side of Bank Statement
STEP 2: Compare the items from credit side of Cash Book
and items in debit side of Bank Statement
STEP 3: Identify for any mistakes in Cash Book or Bank Statement
STEP 4: Prepare Bank Reconciliation Statement
-Items in Cash Book that is not in Bank Statement
-Items in Bank Statement that is not in Cash Book
-Any error in Bank Statement and Cash Book
14. CashBook
20X8 RM 20X8 RM
1-DecBalanceb/d 160 8-DecVO'Connor 115
12-DecD.Tyrall 80 21-Dec 35
23-DecP.McCarthy 130 31-Dec 25
31-DecS.Aisbitt 72 31-DecBalancec/d 267
442 442
20X9
1-Jan Balanceb/d 267
Step 2
Compare CR item on CB
with DR item on BS and if
there any unmatched item
circle it out
Step 1
Compare DR item on CB
with CR item on BS and if
there any unmatched item
circle it out
Step 3
Prepare bank recon based on:
-Items in Cash Book that is not in
Bank Statement
Balance as
per cash book
15. BankStatement
20X8 Withdrawals Deposits Balanceb/d
1-Dec Balanceb/d 160
11-Dec 24621 115 45
14-Dec Deposit 80 125
23-Dec 24622 35 90
29-Dec Deposit 130 220
30-Dec BankGirocredit 24 244
31-Dec BankCharges 40 204
Notes
Step 2
Compare DR item on BS
with CR item on CB and if
there any unmatched item
circle it out
Step 1
Compare CR
item on BS
with DR item
on CB and if
there any
unmatched
item circle it
out
Step 3
Prepare bank recon based on:
Items in Bank Statement that is not in
Cash Book
17. BANK RECONCILIATION
Solution 1
Balance as per cash book
+ all credit item on both CB and BS
- all debit item on both CB and BS
Balance as per bank statement
Solution 2
Balance as per bank statement
- all credit item on both CB and BS
+ all debit item on both CB and BS
Balance as per cash book
