IGCSE Accounting Paper-2: Specimen Questions with Answers 31 - 33 of 103

Passage

  1. Mr. Stanley had 2 accounts with HSBC Bank named A/c 1 and A/c 2. As on 31.12. 2015, his cash book showed balances of £540 and £27040 in the two A/c’s respectively.

On examining the bank statements, the following were noticed:

(i) £2700 has been transferred from A/c 2 to A/c 1 by the bank without intimating Mr. Stanley.

(ii) £10 have been bank charges in both the accounts, which is not intimated to Mr. Stanley

(iii) Cheque for £542 issued on A/c 1 in November not yet presented in bank

(iv) A cheque of £427 deposited by Mr. Stanley in A/c 2 has been credited by bank in A/c 1

Question number: 31 (1 of 5 Based on Passage) Show Passage

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One Liner Question▾

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What is the need for Mr. Stanley to reconcile his bank Account?

Explanation

Mr. Stanley needs to prepare the Bank reconciliation statement, in order to reconcile the bank balance as per the cash book, by showing all the causes of differences between the two and make the respective changes.

Question number: 32 (2 of 5 Based on Passage) Show Passage

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One Liner Question▾

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Is it important for Mr. Stanley to prepare this reconciliation statement?

Explanation

Yes it is important for Mr. Stanley to prepare the Bank reconciliation statement, as it is necessary to find the accuracy of the accounting records maintained by the accountant. The entries omitted by the accountant are brought into light with the help of such a reconciliation statement.

Question number: 33 (3 of 5 Based on Passage) Show Passage

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Short Answer Question▾

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State any 3 differences between a bank statement and a bank reconciliation statement?

Explanation

The three differences between a bank statement and a bank reconciliation statement is as follows:

(i) Bank statement is prepared by the bank while the bank reconciliation statement is prepared by the account holder or customer.

(ii) It is compulsory for the bank to prepare the bank statement, while it is optional for the customer to prepare the reconciliation statement.

(iii) The bank prepares this statement to inform the customer about all the transactions that have taken place during a period. While the reconciliation is prepared by the customer to check the bank balance with the cash book balance.