These eight questions use new figures and ramp from simple sorting to a full reconciliation. Write your own working first, then open the answer.
The questions follow the lessons in SPM Accounting controls.
Questions
Question 1: A cheque for RM520 has been written and entered in the cash book but not yet banked by the supplier. Does the cash book or the reconciliation statement change?
Answer
The cash book is already correct, so it does not change. The cheque is an unpresented cheque and appears only as a reconciling item between the updated cash book balance and the bank statement balance.
Question 2: Name the two records that a bank reconciliation compares, and say what a debit balance in the cash book means.
Answer
It compares the business’s cash book with the bank’s statement. A debit balance in the cash book means money is held in the bank, so the same balance shows as a credit on the bank statement.
Question 3: The cash book shows RM3 900. The bank statement shows interest received of RM30 and RM45 of bank charges that are not in the cash book. Find the updated cash book balance.
Answer
RM3 900 − RM45 + RM30 = RM3 885. Both items appear on the statement only, so the cash book changes.
Question 4: Updated cash book balance is RM5 620. There is an uncredited deposit of RM800 and unpresented cheques of RM1 350. Find the bank statement balance.
Answer
Start from the updated cash book balance. Add the unpresented cheques because the bank has not deducted them yet: RM5 620 + RM1 350 = RM6 970. Subtract the deposit the bank has not yet credited: RM6 970 − RM800 = RM6 170.
Question 5: A receivables control account has an opening balance of RM12 000, credit sales of RM41 000, cash received of RM38 500, sales returns of RM1 200 and discount allowed of RM600. Find the closing balance.
Answer
Debits: 12 000 + 41 000 = 53 000.
Credits before the balance: 38 500 + 1 200 + 600 = 40 300.
Closing balance = 53 000 − 40 300 = RM12 700.
Question 6: A payables control account has an opening balance of RM6 400, credit purchases of RM22 900, payments of RM21 000, purchases returns of RM900 and discount received of RM350. Find the closing balance.
Answer
Credits: 6 400 + 22 900 = 29 300.
Debits: 21 000 + 900 + 350 = 22 250.
Closing balance = 29 300 − 22 250 = RM7 050, which is a credit balance because it is owed to suppliers.
Question 7: The cash book shows RM8 300 and the statement shows RM7 665. The statement has a standing order of RM200 and a dishonoured customer cheque of RM320 that are not in the cash book. The cash book has a deposit of RM1 100 not yet credited. Find the unpresented cheques, and prove that the reconciliation agrees.
Answer
Updated cash book = 8 300 − 200 − 320 = RM7 780.
Let U be the unpresented cheques. The reconciliation is updated cash book + U − deposit = statement, so 7 780 + U − 1 100 = 7 665.
That gives U = 7 665 − 6 680 = RM985.
Proof: 7 780 + 985 − 1 100 = 7 665. The reconciliation agrees.
Question 8: In a small business one person opens the post, records receipts and banks the money. Explain the risk and give two controls.
Answer
Risk: the person could keep some receipts and alter the record, and nobody would notice.
Control 1: separate the duties, so that a second person records the receipts. This means a false record needs two people to agree.
Control 2: reconcile the cash book with the bank statement every month. A missing deposit would show as an unexplained difference, so the problem is found early.
If you got these wrong
Questions 1 to 4 and 7 test reconciling the cash book and bank statement and tracing unmatched items. Questions 5 and 6 test control accounts. Question 8 tests internal controls.
Build a timed set with the timed original practice session builder. To go through your errors with a teacher, see online one-to-one Accounting tuition.