Chapter 21

BANK RECONCILIATION


Sec. 1. Scope. This Chapter covers the preparation of the bank reconciliation statements for Cash in Bank and Cash - Modified Disbursement System accounts including the proposed adjusting entries.

Sec. 2. Definition of Terms. For the purpose of this Manual, the terms used as stated below shall be construed to mean as follows:

a. Bank Charges - expenses charged by the bank for cost of check books, or other services.

b. Bank Reconciliation - settlement of differences contained in the bank statement and the cash account in the agency's books of accounts.

c. Bank Statement - reflects the transactions in the agency's (depositor's) bank account for a period such as deposits made to the account as well as checks drawn on the account, bank charges, returned items, etc.

d. Canceled Check - checks issued and chargeable to the agency bank account but was later void due to expiration of validity, and other valid reasons.

e. Credit Memorandum - documents issued by the bank informing an increase in the depositor's (Agency's) account for such things as previous bank debit errors and collection directly deposited to the agency bank account.

f. Debit Memorandum - reports a decrease in the account such things as previous bank credit errors or service charges and fees.

g. Deposits-in-Transit - are amounts of agency deposits in the bank but which are yet to be recorded until the next period. These usually pertain to late deposits in the last day of business for a period.

h. Lapsed NCAs - NCAs which are no longer valid or its validity has expired but remain unadjusted by the bank or the agency.

i. Notice of Cash Allocation - a document issued by the DBM authorizing the agency to issue checks chargeable to the MDS account of the agency maintained for the account of the Treasurer of the Philippines.

j. Outstanding Checks - are those the agency has issued and recognized but which have not been presented to the bank for payment.

k. Returned Check - a check that is not honored by the bank because of errors or deficiencies in the maker's account.

l. Unrecorded Deposits - are collections of the agency which are directly deposited by the debtor/client to the bank account of the agency but remain unrecorded by the agency as at the period under reconciliation.



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