It’s always interesting to see what affects the balance on a bank reconciliation. This article will have a list of different things that will deduct from the balance shown in accounts on a bank reconciliation.
1) Tax, which is accounted for through use of an income statement or tax return.2) Non-cash transactions, such as depreciation and amortization, which are treated as expenses.3) Contributed funds withdrawn by stockholders who invested money in the company such as dividends or share repurchases .4) Allowance for doubtful accounts and accruals, which is an estimate of the amount of money that is likely to be uncollectable or unrecoverable.5) Profit from the sale of assets, which is a reduction in the balance due after deducting the cost of sale.6) Unpaid legal fees (accounted for as an expense)7) Bad debts (accounted for as an expense)8) Unrecoverables are any accounts receivable that are not collectable within a year.9) Other bad debts, such as loans made to customers that fail to make payments.10) Recoveries (in the case of a bad debt, the amount of the bad debt is recovered, less charges made to recover that amount).11) Depreciation (less allowance for depreciation).12) Amortization (accounted for as an expense).13) Allowance for doubtful accounts, accruals and uncollectable accounts.14) Accrued expenses such as payroll.15) Bad debts other than loans, and uncollectables other than disputed accounts.16) Unpaid legal fees or any other miscellaneous charges.17) Depreciation on debtors, capitalized interest on capital expenditure and related items.
18) Items of income which are realized but not recorded in the books because of various reasons such as:a. Taxes on the incomeb. Liquidation of businessc. Uncollectablesd. To reduce overheads for financial reporting purposes
19) Capital reduction, which is the difference between common stock and contributed surplus and capital carried to surplus (after all distributions have been paid).
20) Increase or decrease in a liability, which will be shown on the balance sheet.21) Difference between cash, accounts receivable and investments at bank and cash book figures.22) Amounts received from interest accrued on deposits at bank23) Decrease or increase in prepaid expenses (accounted for as an expense).24) Increase or decrease in merchandise inventory (be accounted for as an expense).25) Increase or decrease in prepaid expenses.26) Decrease or increase in bank overdrafts.27) Dividend paid on common stock (to be shown on the income statement).28) Decrease or increase in the cash account on bank statement (for example through use of petty cash).29) Decrease in bad debt expense and increase in cash or the reverse.30) Increase or decrease in accrued expenses.31) Increase or decrease in the balance on bank statement, which is due to day-to-day collection and disbursement activities.32) Unpaid deposits made to suppliers by companies, for example deposits against placing an order for raw materials.33) Any other kind of transaction that affects accounts receivable, inventories, prepaid expenses, creditors;and other expenses.34) Increase or decrease in cash, accounts receivable, debts due from customers and other expenses.35) Amounts payable due to banks (such as interest on deposits).36) Dividend paid by a subsidiary to its parent company.37) Amounts payable due to suppliers of raw materials and other materials and goods, such as interest on purchased goods.38) Uncollectable accounts other than doubtful accounts.39) Changes in the balance owing from one statement period to another.(such as the difference between the cash book and bank statement — see under #’s1-32 above).40) Other items that affect the balance on a bank reconciliation.
The following list of items is not comprehensive at all. It is just a list of transactions that affect the balance on a bank reconciliation.
1. Difference between the date on which income was received and the date on which it should have been recorded in the books, if it is not recorded at all.2. Differences between presentation of cash book figure and actual figures as appearing on bank statement.3. Deposits with banks, which are not recorded in cash book, but they do appear as adjustments on bank statement.4. Unrecorded disbursements by banks from customer’s accounts in case of over-drafts or overdraft facilities provided to customers.5. Unrecorded interest accrued on deposits held by banks6. Unrecorded interest paid to clients7. Purchases return8.
