A reconciliation that does not agree is not a dead end. The size and direction of the difference tell you where to look.
This page belongs to SPM Accounting controls and assumes you have met the layout for a bank reconciliation.
How do you narrow down a difference?
Begin with the exact amount, then test three patterns. Is there one item of that size? Is there one item of half that size, which would mean it sits on the wrong side? Is the amount divisible by nine, which would suggest two digits were swapped?
The four lessons below match four kinds of difference you may meet in SPM questions.
Which repair lesson fits?
- Distinguishing cash book updates from bank statement timing differences fits when you are unsure whether an item needs an entry or only a line on the statement.
- Handling an overdraft without changing the direction of every adjustment fits when the cash book shows a credit balance and your signs flip.
- Tracing an omitted receipt through a control account fits when a ledger total and the customer list disagree.
- Explaining why a balanced trial balance can still contain errors fits when everything agrees and the paper still says the records are wrong.
A short example
A control account closes at RM9 650 and the list of customer balances adds to RM9 350. The difference is RM300, which matches no half or digit pattern, so search for a single item of RM300.
A credit sale of RM300 was recorded in the sales day book, so it reached the control account. It was never posted to the customer’s own account, which leaves the list lower. One item, one posting, one repair.
Where should you start?
If you are unsure what kind of difference you have, begin with the first repair lesson, because it teaches the test that separates timing items from missing entries. If your cash book shows a credit balance, go to the second.
After the lessons, use the practice set for this topic. The wider idea that agreement does not prove correctness is covered under the trial balance and correction of errors.
For a teacher to search your own reconciliation with you, see online one-to-one Accounting tuition.