Bank reconciliation statements: 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
How should the bank-statement differences be treated in the cash book and reconciliation? Use the complete source image for the figures and answer choices.
Answer: A.
The cash book is updated only for items the business did not yet know about, which here is the bank charges. Timing differences such as unpresented cheques and outstanding lodgements are already correctly recorded in the cash book and simply have not reached the bank statement yet, so they belong in the reconciliation statement. Errors made by the BANK are the bank's to fix, not the trader's, so they also go in the reconciliation rather than being written into his own ledger. Correcting a bank error in the cash book would make the cash book wrong.
Question 2
Which statements about a bank reconciliation are correct?
1 Cleared cheques are excluded.
2 It locates all errors.
3 It locates any fraud.
4 Uncredited deposits are included.
Answer: B.
1 and 4. Cheques that have already cleared appear in both the cash book and the bank statement, so they need no adjustment and are excluded. Uncredited deposits are in the cash book but not yet on the statement, so they are included as a reconciling item. Statements 2 and 3 overclaim: a reconciliation finds only differences that show up between the two records, and it will miss a transaction omitted from both, or a fraud recorded consistently in each.
Question 3
A business is preparing a bank reconciliation statement. The following information is available. $ uncleared lodgements 3450
unpresented cheques 2950
cash book balance 7650 credit
What is the debit balance on the bank statement?
Answer: C.
The cash book balance is a CREDIT of $7650, which means the account is overdrawn, so it enters the calculation as negative. Adding the unpresented cheques of $2950 and deducting the uncleared lodgements of $3450 gives negative $8150, so the statement shows an $8150 overdraft. In the bank's own books that is a DEBIT balance, since the customer owes the bank. Treating the cash book balance as positive gives $7150, and reversing the two timing differences gives $1250.
Question 4
A book-keeper compared the business bank statement with the cash book. He then updated the cash book and finally prepared a bank reconciliation statement.
Why was the bank reconciliation statement prepared?
Answer: C.
To explain the difference between the two balances. The cash book has already been updated for the items the business did not know about, so what remains is the timing differences, and the reconciliation statement sets them out to show why two correct records still disagree. Establishing the unpresented cheques is a step within that, not the purpose, and neither omissions nor dishonoured cheques are found by the statement itself: those are dealt with when the cash book is updated beforehand.
Question 5
Which statements about an unpresented cheque are correct?
1 It arises as the result of an error of omission.
2 It arises from a timing difference.
3 It is used when preparing a bank reconciliation statement.
Answer: C.
2 and 3. An unpresented cheque has been correctly written up in the cash book but has not yet passed through the bank, so it is purely a TIMING difference and it appears in the bank reconciliation statement as a deduction from the bank statement balance. Statement 1 is wrong because nothing has been omitted: the entry exists and is right. An error of omission would mean a transaction left out of the books altogether, which is a bookkeeping error rather than a reconciling item.
What this practice covers
These questions are drawn from past CIE 9706 Accounting papers and filtered to bank reconciliation statements. 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 statements, 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 rather than the corrected one in the reconciliation.
- Forgetting that a dishonoured cheque must also be debited back to the customer's account.
- Mishandling an overdraft by ignoring the sign.
- Showing the bank statement balance in the statement of financial position. The corrected cash book balance goes there.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Bank reconciliation statements revision notes.