Understanding Bookkeeping

Debit Side Of The Bank Statement:

•  Bank charges and commission;

•  Bank overdraft interest;

• Cheques from customers that have been dishonoured;

• Telegraphic transfers made by the company;

• Standing order instruction

Credit Side Of The Bank Statement:

• Interest and dividends received by bank on behalf of the company;

• Re-presented cheques which are cheques earlier dishonoured now represented for payment;

• Credit transfers/amount paid direct by debtors to the company’s bank account.

Main Reasons For Timing Difference

Items on the credit side of the Cash Book not in the Bank Statement.

Cheques drawn in favour of creditors and credited in the Cash book may not yet been presented by the creditors for payment;

Lodgements Not Credited:

     Items on the debit side of the Cash Book not in the Bank Statement.

      Mainly cheques received and banked but not recorded by the bank because these cheques have not been cleared by the clearing system;

Payments on Bank Statements not in the Cash Book

      Example like credit transfers and standing order, bank interest, bank overdraft interest and charges;

Cheques dishonoured entered in the Bank Statement not in the Cash Book;

Dividends received, bills receivables, etc collected by the Bank and recorded in the Bank Statement but not in the Cash Book

Bills payables paid by the bank and recorded in the Bank Statement but not in the Cash Book