Every unmatched item belongs to exactly one record. If you touch it in both places, the reconciliation will be out by the amount of that item.
This lesson is part of SPM Accounting controls and follows reconciling the cash book and bank statement.
How do you sort an unmatched item?
Tick every entry that appears in both the cash book and the statement. What remains unticked is your unmatched list.
For each leftover item, ask two questions. First, which record has it? Second, which record does not? The record that lacks it is the one that changes, and only that one.
Worked example: five unmatched items
A cash book shows RM6 240 and the bank statement shows RM5 680. After ticking, these items are left.
| Item | RM | Which record has it? | Which record changes? |
|---|---|---|---|
| Cheque 0412 to a supplier | 450 | Cash book only | Statement side |
| Deposit on the last day of the month | 1 200 | Cash book only | Statement side |
| Standing order | 150 | Statement only | Cash book |
| Bank charges | 40 | Statement only | Cash book |
| Customer credit transfer | 380 | Statement only | Cash book |
Update the cash book first: RM6 240 − RM150 − RM40 + RM380 = RM6 430.
Now adjust the statement for the two cash book items. RM5 680 − RM450 + RM1 200 = RM6 430. The two sides agree at RM6 430.
What does a double count look like?
Suppose the student also subtracts the standing order of RM150 from the statement balance. The statement side becomes RM5 680 − RM450 + RM1 200 − RM150 = RM6 280.
The two sides now differ by RM150, which is exactly the size of the standing order. That clue is useful: when the final difference equals one item, look for that item first.
The mistake that loses marks
The slip usually comes from treating the word “adjust” as permission to adjust anywhere. The standing order was missing from the cash book, so the cash book is the record that changes.
Timing items, meaning those the bank has not processed yet, stay on the reconciliation statement. Items already processed by the bank go into the cash book. There is no item that does both.
Check yourself
The cash book shows RM3 100 and the bank statement shows RM3 000. RM60 of bank charges appears on the statement only. The cash book has an unpresented cheque of RM210 and an uncredited deposit of RM250. Which record changes for each item, and does the reconciliation agree?
Answer
RM60 of bank charges: statement only, so the cash book changes. Updated cash book = RM3 100 − RM60 = RM3 040.
Unpresented cheque RM210 and uncredited deposit RM250: cash book only, so the statement side changes. RM3 000 − RM210 + RM250 = RM3 040.
Both sides agree at RM3 040, and each item was used exactly once.
What to study next
When a gap remains after sorting, continue with finding the cause of a reconciliation difference. Then try the accounting controls practice set and log any repeat slips in the mistake log and paper-error review.
If you would like a teacher to watch your sorting step on your own questions, see online one-to-one Accounting tuition.