Chapter 3 Flashcards

Bank Statement

A monthly document issued by a bank to its account holders, summarizing all transactions within the statement period, including deposits, withdrawals, charges, and balances.

Balance per Books, End

The ending cash balance recorded in a company's accounting records at the end of a specific period, reflecting all recorded transactions such as deposits, withdrawals, checks issued, bank fees, and interest earned.

Balance per Bank Statement, End

The ending cash balance shown on the bank statement for the corresponding period, including all transactions processed by the bank such as deposits, withdrawals, cleared checks, fees, and interest.

Credit Memos

Documents issued by a seller to a buyer, reducing the amount owed due to returned goods, price adjustments, or discounts.

Debit Memos

Documents issued by a seller to a buyer, notifying them of an additional charge to their account, often for invoice adjustments or penalties.

Bank Service Charges

Fees charged by a bank for account maintenance, electronic transfers, check processing, or other services.

No Sufficient Funds (NSF) Checks / Drawn Against Insufficient Funds (DAIF) Checks

Checks deposited by a company that are returned due to insufficient funds in the issuer’s account.

Automatic Debits

Pre

Payment of Loans

Installments made by a company to repay loans, recorded in the company's books but not always immediately reflected in the bank statement.

Book Errors

Mistakes in recording transactions in a company’s accounting records, leading to discrepancies between the book balance and bank statement balance.

Deposits in Transit

Deposits made by a company that have not yet been recorded by the bank due to timing differences, such as deposits made at the end of the day or over the weekend.

Outstanding Checks

Checks issued by a company but not yet cashed by the recipient, recorded in the company’s books but not yet reflected on the bank statement.

Certified Checks

Checks guaranteed by the bank, ensuring that the drawer has sufficient funds to cover the check.

Stale Checks

Checks that have been outstanding for an extended period (typically more than six months) and may not be honored by the bank.

Bank Errors

Mistakes made by the bank in processing transactions or recording balances, leading to discrepancies between the bank statement and company records.

Book Reconciling Items

Adjustments made to the balance per books to match the bank statement balance, including transactions recorded by the company but not yet recorded by the bank, such as deposits in transit or outstanding checks.

Bank Reconciling Items

Adjustments made to the balance per bank statement to match the book balance, including transactions recorded by the bank but not yet recorded by the company, such as bank service charges or NSF checks.

Proof of Cash

A document summarizing all cash receipts and disbursements for a specific period, comparing both bank and company records to verify cash transactions and identify discrepancies

Pro Forma Bank Reconciliation Statement

A projected or hypothetical bank reconciliation statement estimating the expected cash balance at a future date, used for financial planning and cash flow assessment.