Bank reconciliations

In this lesson

1. 0:00 Bank reconciliation overview
2. 1:18 Adjusting cash book and bank statement
3. 3:08 Common reconciliation issues
4. 4:23 Worked example: Paris Limited
5. 7:46 Presenting bank figures in statements
6. 8:59 Narrative question: cash book adjustments

About this lesson

Bank reconciliations compare your cash book balance to your bank statement balance, identifying and adjusting for timing differences, errors, and omissions until both figures agree. You'll discover why certain items (like bank charges, dishonoured cheques, and direct debits) require adjustment to the cash book, while others (outstanding cheques and lodgements) adjust the bank statement instead. The lesson walks you through the step-by-step process: set up your cash book ledger account with the opening balance, make necessary adjustments, then reconcile to the bank statement balance by accounting for outstanding payments and receipts. You'll see how to handle common issues—bank charges that only appear on the statement, outstanding cheques and lodgements that create timing differences, and dishonoured cheques that reduce your available funds. The worked example shows you how to structure the reconciliation so your updated cash book balance matches your updated bank statement balance, confirming everything is correct. You'll also learn to recognise the distinction between items that need cash book adjustment and reconciling items, and understand how to interpret exam questions that ask which items require adjustment. By the end, you'll be confident handling both numerical reconciliations and narrative questions about what adjustments are needed—essential knowledge for passing your exams and managing real business finances.

Duration: 12m