ExpertEasy2 marksShort Answer
ACCA · Question 12 · The Use of Double-Entry and Accounting Systems
Section A
At 30 November, a company's cash book showed a debit balance of $4,200. The bank statement showed a credit balance of $5,100. The following differences were identified:
- Unpresented cheques: $1,500
- Lodgements in transit (uncleared deposits): $800
- Bank charges not entered in the cash book: $200
What is the correct cash book balance to be reported in the statement of financial position? (Enter the number only)
Section A
At 30 November, a company's cash book showed a debit balance of $4,200. The bank statement showed a credit balance of $5,100. The following differences were identified:
- Unpresented cheques: $1,500
- Lodgements in transit (uncleared deposits): $800
- Bank charges not entered in the cash book: $200
What is the correct cash book balance to be reported in the statement of financial position? (Enter the number only)
How to approach this question
Adjust the cash book balance for items on the bank statement not yet in the cash book (bank charges). Alternatively, adjust the bank statement balance for timing differences (unpresented cheques, lodgements). Both should arrive at the same figure.
Full Answer
Method 1 (Adjusting Cash Book): Original CB balance ($4,200) - Bank charges ($200) = $4,000.
Method 2 (Adjusting Bank Statement): Bank statement balance ($5,100) - Unpresented cheques ($1,500) + Lodgements in transit ($800) = $4,000.
The correct balance for the financial statements is $4,000.
Common mistakes
Adjusting the cash book for unpresented cheques or lodgements, which are timing differences that clear themselves.
Practice the full ACCA FA — Financial Accounting Practice Exam 5
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