Accounting Chapter 5

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  1. Bank reconciliation
    The process of reconciling the differences between the cash balance on a bank statement and the cash balance in a company's records.
  2. How is a bank reconciliation prepared?
    • 1. Reconcile the bank balance to the actual cash balance.
    • 2. Reconcile the company's book balance to the actual cash balance.
    • 3. Adjust the company's book balance to the actual cash balance.
  3. Deposit in transit
    A deposit that has been made by the company but has not cleared the bank as of the statement date.
  4. Outstanding check
    A check that has been distributed by the company but has not cleared the bank as of the statement date.
  5. Credit memorandum
    An addition to the cash balance on the bank statement for items such as the collection of interest.
  6. Debit memorandum
    A subtraction from the cash balance on the bank statement for items such as service charges.
Author:
noblewhit
ID:
142456
Card Set:
Accounting Chapter 5
Updated:
2012-03-19 12:12:08
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Accounting
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Description:
Accounting: Chapter 5: Cash Controls
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