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Learn the best way to write Other Accounting Procedures Homework Answers

by Jan 21, 2020Homework Answers

We are already aware that all the firms open with a current account with a bank in order to record the transactions entered into each firm. Banks open a separate account for each firm. In fact, banks enter all the transactions in it.
Bank gives a copy of firm’s account in its ledger to the firm for information. This copy of firm’s account is called bank pass book. At the time when a transaction takes place with the bank, a firm also maintains a bank account in its cash book.
Since all the transactions are recorded with the Bank, details are registered in both cash book and pass book. A balance of both the books must tally with each other.
There can be many reasons which create a difference in the account of both the books. It can become difficult for students at first to comprehend difference that occurs between the two.
Merely studying Reconciliation of Financial Transactions may not achieve the objectives of students. As it is a cumbersome process, in terms of understanding, its value and working are based on time. Other accounting procedures homework answers address this problem in time bound manner, which provides a rational way to get its essence of the matter in execution.
Other Accounting Procedures Homework Answers- Tips:
Rationale behind difference in the Passbook and Cashbook Balance-

  • Time interval in documenting transactions-

When entering a transaction in both cashbook and passbook there occurs a difference in time lag. This is because it is not possible to record in both the books at the same time.
Some of the instances which increase time lag in documenting transactions.
Following are the instances of the time lag between the accounts of cash book and pass book: 

  1. Any firm for instance firm (A) issue a cheque of Rs. 10,000 to one of its creditor. The firm immediately records this transaction on credit side of bank column of its cash book.

However, the bank will record this transaction only when the cheque is presented to bank by the creditor for payment.  Hence, there occur gap of few days. This is usually between the problems of a cheque or its presentation to relevant bank.

  1. Whenever any company receives cheques from its customer, the firm immediately deposits this cheque in the bank for collection. After that, instantly this records this transaction on debit section of bank column of its cash book.

Banks credit the firm account only on a certain situation. It is when the actual payment collection is made from the cheque from other banks.
Hence, there again will be a time lag between depositing of cheques and also those cheques cleared by the banks. Thus, until the bank clears cheques, the cash book of the company will show a hike in balance when compared to that of pass book. 
Whenever the cheques are received from third parties, they are deposited in the bank. These records for such transactions are instantly made on debit section of bank column. But, if the bank dishonors cheques, no entry will be made in the pass book.
As a result, there occurs a disparity between the balances of cash book and pass book. 

  • If a customer has a saving bank account, the bank gives a certain percentage of interests on the minimum balance of each month. Normally, the amount of such interest is credited by bank at the end of every six months.

But the customer will be informed about the amount of interest only when he gets his pass book updated after a certain period of time. This time interval between the update of passbook and the amount of interest credited by the bank will create an imbalance of accounts of pass book and cash book. 

  • In some cases, customers directly ask a bank for payment of the other part on their behalf. Under this circumstance, the bank will make the payment and update the passbook.

But, the firm will be able to enter the same transaction only after getting information. This will also lead to an imbalance between the accounts of both the books.
A Disparity in the balances due to not recording certain transactions:
In some cases, human errors take place while recording the accounting transactions. For instance:

  1. Fail to document the transactions
  2. Repeated entry of certain transactions
  3. Entry of correct transaction with incorrect amount and vice versa
  4. Misplacing debit with credit and vice versa
  5. Inaccurate calculation
  6. Duplicity of certain transactions

Need of other Accounting Procedures Homework Answers-
This will help you to understand the objective and importance of reconciliation in accounting and finance field.

  1. Reconciliation of Financial Transaction works as a rectifier that locates all kinds of errors or miscalculation that occur in relation to the bank or customer
  2. It helps in maintaining smooth working of transactions in lieu of correct balance as shown in the cash book by the bank
  3. It facilitates updating of cash book in relation to interest, charges or payments that are allowed by the bank on customer’s behalf
  4. It helps to keep a tab on unnecessary lag that occurs in a bank while collecting cheques.
  5. It tracks records of cheques as received by the bank
  6. Aid in eliminating human errors in the bank or firm

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