Each question gives you a difference or a doubt, and you find the cause. Write your reasoning before you open the answer.
The questions follow the lessons in finding the cause of a reconciliation difference.
Questions
Question 1: A cash book shows RM2 400 and a statement RM2 340. RM60 of bank charges appears on the statement only. Is the reconciliation explained?
Answer
The charges are an update, so the cash book changes: RM2 400 − RM60 = RM2 340. This equals the statement balance, so every difference is explained.
Question 2: Classify each item as timing or update: (a) a cheque to a supplier already in the cash book; (b) an insurance direct debit shown on the statement only.
Answer
(a) Timing difference, because the business has recorded it and the bank has not yet processed it.
(b) Cash book update, because the bank has recorded it and the business has not.
Question 3: A cash book shows an overdraft of RM920. A direct credit from a customer of RM200 and RM35 of bank charges are on the statement only. Find the updated cash book balance.
Answer
Use signs: −920 − 35 + 200 = −755, an overdraft of RM755. The charge makes the overdraft bigger, and the receipt makes it smaller.
Question 4: The updated cash book shows an overdraft of RM755. Unpresented cheques are RM400 and there are no other items. Find the statement balance.
Answer
S − 400 = −755, so S = −355. The statement shows an overdraft of RM355.
Check: RM355 overdrawn plus the RM400 the bank has not yet deducted gives RM755 overdrawn.
Question 5: A payables control account closes at RM8 120 and the list of supplier balances is RM8 210. What size is the difference and what would you search for first?
Answer
The difference is RM90. Search for one item of RM90, and also check whether a figure was transposed, because 90 is divisible by nine (for example 540 copied as 450).
Question 6: A receivables control account closes at RM11 200 and the customer list adds to RM11 450. A customer’s cheque of RM250 was received. What is the likely cause and repair?
Answer
The list is higher by RM250, so a receipt of RM250 was probably credited in the control account but not in the customer’s own account. Repair: credit the customer’s account with RM250. The list then becomes RM11 200.
Question 7: Which of these would a trial balance reveal? (a) A RM400 purchase omitted completely. (b) Discount received of RM80 credited but the debit to the supplier never posted. (c) Rent of RM1 000 debited to the wages account.
Answer
(a) Not revealed: both sides are missing, so totals still agree.
(b) Revealed: only the credit was posted, so credits exceed debits by RM80.
(c) Not revealed: error of commission, the amount is correct on both sides.
If you got these wrong
Questions 1 and 2 test cash book updates against timing differences. Questions 3 and 4 test overdrafts. Questions 5 and 6 test omitted receipts in control accounts, and question 7 tests hidden trial balance errors.
Record repeated slips in the mistake log and paper-error review. To go through them with a teacher, see online one-to-one Accounting tuition.