Items in the bank statement of a business but not in the cash book before preparation of bank reconciliation statement do not include?
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Correct Answer: Option C
Explanation:
A bank reconciliation statement is prepared to reconcile the difference between the cash book (business records) and the bank statement (bank records).
Certain items appear in the bank statement but not yet in the cash book because the business is unaware of them until the bank statement is received. These items typically include:
A. Bank charges – Fees charged by the bank not yet recorded by the business.
B. Standing order – Regular payments made by the bank on behalf of the business (e.g., subscriptions, rent), often unknown until seen on the statement.
D. Interest on overdraft – Charged by the bank for using overdraft, also usually found only in the bank statement.
However:
C. Presented cheque refers to a cheque already issued by the business and now presented to the bank for payment.
This would already be recorded in the cash book when the cheque was issued, so it's not an item missing from the cash book.
A bank reconciliation statement is prepared to reconcile the difference between the cash book (business records) and the bank statement (bank records).
Certain items appear in the bank statement but not yet in the cash book because the business is unaware of them until the bank statement is received. These items typically include:
A. Bank charges – Fees charged by the bank not yet recorded by the business.
B. Standing order – Regular payments made by the bank on behalf of the business (e.g., subscriptions, rent), often unknown until seen on the statement.
D. Interest on overdraft – Charged by the bank for using overdraft, also usually found only in the bank statement.
However:
C. Presented cheque refers to a cheque already issued by the business and now presented to the bank for payment.
This would already be recorded in the cash book when the cheque was issued, so it's not an item missing from the cash book.