Bank reconciliation: five questions to try now
Real past-paper questions, the answer key from the mark scheme, and the explanation that goes with it. No account needed to answer them.
Question 1
Which statement about a bank reconciliation statement is correct? Use the complete source image for the question and answer choices. Source reference: M19 Paper 12, Q1(e).
Answer: A.
A bank reconciliation statement exists to explain the gap between the cash book and the bank statement, and the gap is made of timing differences: cheques the trader has written and recorded but the bank has not yet paid, and deposits recorded but not yet credited. A says exactly that and is correct. B and C both describe the BANK STATEMENT, which the bank prepares from its own records and sends to the trader at intervals. D describes the cash book, which the trader writes up himself. The reconciliation is a separate working, prepared by the trader after the cash book has been updated, and it is not part of the double entry.
Question 2
The balance of cash at bank shown in the cash book is $1200. The bank statement at the same date shows the balance to be $1440.
What could explain the difference?
Answer: C.
The bank shows 240 MORE than the cash book, so look for something the cash book has already taken off and the bank has not. Cheques written to suppliers and not yet presented are exactly that, so C is correct. B pushes the other way: bank charges the bank has deducted and the cash book has not would leave the bank LOWER. D also pushes the other way, since receipts banked but not yet on the statement are already in the cash book. A produces a difference of 240, because a payment entered as a receipt is wrong twice over, but it leaves the CASH BOOK too high, not the bank statement.
Question 3
Jamal’s bank statement at 1 May 2021 showed a bank overdraft of $1460.
At that date there were unpresented cheques of $385 and uncredited deposits of $255.
What was the cash book balance on 1 May 2021?
Answer: C.
Start at the bank's overdraft of 1460 and move towards the cash book. The unpresented cheques of 385 are already deducted in the cash book, so the cash book is 385 worse off than the bank shows. The uncredited deposits of 255 are already added in the cash book, so it is 255 better off. That gives minus 1460 less 385 plus 255, which is minus 1590, an overdraft. In the CASH BOOK an overdraft is a credit balance, so C is correct and D is the same figure on the wrong side. A and B of 1330 reverse both timing differences, adding what the cash book has already spent and deducting what it has already banked.
Question 4
Jamal’s bank statement on 1 September 2022 showed a bank overdraft of $1460.
At that date there were unpresented cheques of $385 and uncredited deposits of $255.
What was the bank balance in the cash book on 1 September 2022?
Answer: C.
Start at the bank's overdraft of 1460 and move towards the cash book. The unpresented cheques of 385 are already deducted in the cash book, so the cash book is 385 worse off than the bank shows. The uncredited deposits of 255 are already added in the cash book, so it is 255 better off. That gives minus 1460 less 385 plus 255, which is minus 1590, an overdraft. In the CASH BOOK an overdraft is a credit balance, so C is correct and D is the same figure on the wrong side. A and B of 1330 reverse both timing differences, adding what the cash book has already spent and deducting what it has already banked.
Question 5
What is true about a bank statement?
1 It is a demand by the bank for repayment of an overdraft.
2 It shows a positive bank balance as a debit balance.
3 It shows transactions affecting the bank account in a given period.
Answer: D.
Only statement 3 is true, so D is correct: a bank statement is the bank's record of the transactions passing through the account in a period. Statement 2 gets the convention backwards. The statement is written from the BANK's side, where a customer in credit is owed money by the bank, so a positive balance appears as a CREDIT and an overdraft as a debit, which is the reverse of the cash book. Statement 1 confuses a record with a demand: a statement reports what has happened, and repayment of an overdraft is a matter for the lending agreement, not for the monthly summary.
What this practice covers
These questions are drawn from past CIE 0452 Accounting papers and filtered to bank reconciliation. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
What examiners see students get wrong here
These are the errors that cost marks on bank reconciliation, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Putting bank charges or standing orders in the reconciliation statement instead of the cash book.
- Reversing the treatment of unpresented cheques and outstanding lodgements.
- Using the original cash book balance in the reconciliation rather than the corrected one.
- Forgetting to reinstate the customer's debt when a cheque is dishonoured.
- Getting the sign wrong on an overdraft.
- Showing the bank statement balance in the statement of financial position instead of the corrected cash book balance.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Bank reconciliation revision notes.