(a) What is a Bank Reconciliation Statement? (b) Explain the following terms: (i) Bank Charges (ii) Standing order (iii) Credit Transfer (iv) Dishonoured Ch...

Answer Details

(a) A Bank Reconciliation Statement is a document that compares and reconciles the balance of a company's bank account with the balance shown on the bank statement. The purpose of the statement is to identify any differences between the two balances and to reconcile them.

(b)

(i) Bank Charges: These are fees charged by banks for services rendered to their customers. Bank charges can include charges for transactions, account maintenance, and other services provided by the bank.

(ii) Standing order: This is an instruction given by a bank customer to their bank to make regular fixed payments to a specific person or company on a particular date. Standing orders are used for regular payments such as rent or loan repayments.

(iii) Credit Transfer: This is a transaction in which money is transferred from one bank account to another. Credit transfers can be initiated by the account holder or by a third party, such as an employer, to pay salaries or wages.

(iv) Dishonoured Cheque: This is a cheque that has been returned by the bank because there are insufficient funds in the account to cover the cheque amount. A dishonoured cheque is also known as a bounced cheque.

(v) Unpresented cheque: This is a cheque that has been issued by the company but has not yet been presented to the bank for payment. The cheque amount is still included in the company's bank balance, but it is not reflected in the bank statement.

(vi) Uncredited cheque: This is a cheque that has been paid into the bank account but has not yet been cleared by the bank. The cheque amount is included in the bank statement balance, but it is not reflected in the company's bank balance until the cheque is cleared.