Bank Reconciliation (Final) Important Terms

Terms in this set (20)

1. Deposit In Transit(Outstanding Deposits)- A deposit in transit has been recorded and has already been added to the company book balance, but the bank has not yet recorded it. These are shown as "Add: Deposits in transit" on the bank side because when the bank does record these deposits, it will increases the bank balance.

ADD

-Made the deposit but did not reach the bank.

- Deposits recorded by the company but not yet recorded by its bank. So these are deposits we know we have made, we put them in the bank, but the bank has not processed them, we have increased are accounts by the deposit, but they have not cleared the bank.

1. Deposit in Transit- Smart ouch learning reviewed the bank statement and the cash account to determine whether any cash deposits made by the business have not yet been recorded by the bank. Smart touch learning identifies that the deposit made on April 24th for 9,000 has not been recorded by the bank. This amount is a dded to the bank balance.

-A deposit in transit is cash (currency, coins, checks, electronic transfers) that a company has received and is rightfully reported as Cash on its balance sheet, but does not appear on the bank statement until a later date.

-Deposits recorded by the company not yet recorded by its bank.

-For example, a retailer might receive $5,000 on Saturday (June 29) and $3,000 on Sunday (June 30). The money is deposited each evening in the bank's night depository. The store's Cash should be debited on each of those days for the respective amounts. However, the bank statement will report the $8,000 as a deposit on Monday, July 1, when the bank processed the items from the night depository.
2. Outstanding Check- A check issued by a company and recorded on its books but not yet paid by its bank
- An outstanding is a check that has been recorded and has already been deducted from the company book balance, but the bank has not yet paid (deducted it.

SUBTRACT

-Checks written and recorded by the depositor but not yet paid by the bank at the bank statement date. Checks we have written on our books, we have them decreasing the amount in our checking amount balance. They have not cleared the bank.

- Such checks are shown as "Less Outstanding checks" on the banks side because when the bank does make payments for the checks, it will decrease the banks balance.

2. Outstanding check- The business reviews the canceled checks included with the statement to determine whether any checks written by the business have not yet cleared the bank. Smart touch learning identifies check number 204 for 2,000 as outstanding. This amounts is subtracted from the bank balance
- after all items affecting the bank side have been identified, the adjusted bank balance is determined.

-An outstanding check is a check that has been written by a company (and deducted from the appropriate general ledger cash account) but it has not yet cleared the bank account on which it is drawn. Hence, outstanding checks will mean that the balance in the bank account will be greater than the balance in the general ledger account (or in an individual's check register).

-Checks written and recorded by the depositor by not yet paid by the bank at the bank statement date.

-In the bank reconciliation process, the total amount of outstanding checks is subtracted from the ending balance on the bank statement when computing the adjusted balance per bank.
5. Non-sufficient Funds (NSF) Checks- A check for which the makers banks account has insufficient money to pay the check.

SUBTRACT

- Represents checks received from customers for payment of services rendered or merchandise sold that have turned out to be worthless.

- NSF checks sometimes called hot checks or bad checks are treated as subtractions on a company's bank reconciliations.

- NSF checkare custoemr checks the company has received and deposited for which the customer doesn't have money in his or her bank account to cover.

- NSF checks will shows as "less NSF checks" on the book side of the reconciliation, as the company previously recorded this receipt as an increase in cash, which now has to be deducted as the funs were not actually received.

-Non-sufficient funds (NSF) check- smart touch learning identifies an NSF check from a customer on the bank statement. The company has recorded the receipt of this check as an increase to cash originally. The banks has now communicated that the customers check did not clear and that the customers payment was never deposited into the business account. Smart touch learning must subtract this amount fro the book balance.

-Not sufficient funds (NSF) is a condition where a bank does not honor a check, because the checking account on which it was drawn does not contain sufficient funds. The term can also be applied to a situation where an individual attempts to make a purchase with a debit card, and there are not sufficient funds in the underlying bank account to pay for the transaction.
-For example, Mr. Jones writes a check to Mr. Smith for $500, which Mr. Smith deposits. Upon presentation of the check, Mr. Jones' bank refuses to honor it on the grounds that there are only $300 in his checking account. This is a not sufficient funds check.
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