Financial Accounting Report: Bank Reconciliation and Entries

This financial accounting report provides an in-depth analysis of key concepts within the field. It begins with an introduction to financial accounting and its importance in tracking a company's financial information, including the use of financial statements such as cash flow statements, balance sheets, and profit and loss accounts. The report delves into Task 3, comparing direct debits, standing orders, and bank charges, and also examines the process of bank reconciliation. It also discusses the implications of dishonored cheques. Task 4 focuses on rectification entries and the use of a suspense account, including example journal entries and a suspense account analysis. The report concludes by summarizing the key findings and reinforcing the importance of financial accounting in organizational success. The report references several academic sources to support its claims.

FINANCIAL
ACCOUNTING
(PART – 2)

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 3 ..........................................................................................................................................1
(a) Comparison between direct debit and various aspects that are related with the bank...........1
P5: Application of bank reconciliation process .........................................................................3
TASK 4............................................................................................................................................4
P6: Rectification entries and suspense account...........................................................................4
(a): Journal entries.......................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Financial Accounting is specialised branch of accounting because it track of every
financial information of company in order to understand actual financial position of company. It
presents through financial statements such as cash flow statement, balance sheet and profit and
loss accounts (Ball, R., 2013) . The transaction are recorded by using guidelines of accounting
and present in summarized way. The presented report consist of overall preparation of financial
record those are available for purpose of public consumption. There is performing bank
reconciliation statements, clearing suspense accounts and control accounts. In addition, reconcile
control accounts and clear suspense accounts.
TASK 3
(a) Comparison between direct debit and various aspects that are related with the bank
Direct Debits – A direct debit a direction from individual side to bank or building society.
It authorises a company want to pay to collect variable amounts from their bank accounts. It is a
crucial matter that will be related with the recording of financial transaction into several financial
statements of the company. It is used by individual for with draw enough amount of funds from
other account after the permission of the account holder (Arouri And et.al, 2012) . It is mainly
based on payment system like credit card and other utilities bills. In the case of bills payment
using direct debits, it would reckon as order for the company with the amount of capital of
owner. It will supply to common customer which is related to transferring of consistent sum of
capital. With the help of process, each consumer used to certain ability in the subject to collect
payment from single accounts. It will make easier to manage and control overall payments
through disposal all the paper works. It is provided important instruction regarding to customer
delivery information to the fear banks to charge the amount without taking into account the
condition that is already due. There is mentioned few matter which is related to direct debit -
 Utility bills ans expenses is becoming more reliable in each month. The bank has right to
about payment service rather than of asking any question from the customers.
 It is related with the system of techniques which is considered by paying part of fixed
membership amount.
Standing orders – It is important facility which is provided by bank to their customers in
order to get more satisfaction from their side. The certain method is based on particular direction
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in compare to authorisation. In the case of whole control is held by the customer and it will
provide help to customer regarding to amount with draw as they required. For these facility bank
charges fees for appropriate facility (Bushman and Williams, 2012) . There is mentioned some
risk which is related to different facility which is provided by bank to their customers -
 There is all over control in the hand of customer for making decision regarding to their
payment.
 In the case of bank facility the bank charged few amount foe these facility which is better
than to direct debiting.
Bank Charges – It is related to bank and consider as part of bank transaction or charges
those are condition by bank for their account holder. It is charged when customer take several
services from bank, these are ATM, credit card, mobile banking, internet banking and bank
overdraft. By bank charged different types of fees which are provided to different customer
according to their services. It is divided into two parts first one is fixed charges and second one is
variable charges. Fixed charges are particularly same fees which is charged on continuous
intervals and floating cost stay on as variable as per the kind of facilities customer are applying.
There is specified some charged which is charged by bank from the customers -
 Bank provide overdraft facility to their customer but charges some amount for provide
this facility.
 It also provide ATM facility to their customers can with draw amount any where in the
state and nations. In the manner to do so bank charges so fees in respective of their total
amount of transactions which is made during the day.
Dishonour of cheque – It is form of situation in which bank neglect or reject cheques in
order to present cheque by customer regarding to payment. Bank provided clear direction
regarding to acceptance and issue of cheques to the account holders. In the situation of omission
of mistake in the cheques after than the concern about parties are need to deliver particular
amount in consequences. There is mentioned different situation of dishonoured of cheque -
 Not sufficient amount in bank account holder
 Mistake in Bank cheques
 Signature mistake
 Bank overdraft not apply on some accounts
Direct Debit Standing Orders Bank Charges Dishonour Cheque
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It is potency of
customer where
provide some rights to
customer by bank. It is
used by customer on
time to time (Martin
and Roychowdhury,
2015).
It is basic facilities
which can be
neglected by customer
on the basis of their
demand.
It is related to different
charges which is
charged by bank on
the provided facility.
In the case of when
customer have not
sufficient amount and
any mistake find out in
cheque so it is
dishonoured by bank.
P5: Application of bank reconciliation process
Revised cash Book (as per bank balance)
Date Particulars
Dr.
balance Date Particulars
Cr.
Balance
Balance as per cash book 1760 Insurance paid 170
Cheque not yet presented 270 Monthly bill 56
Transfer from mr patel 1070 Cheque from arif 186
Drawings 105 bank charges 25
Dividend received 325
By balance as per pass
book 3093
3530 3530
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TASK 4
P6: Rectification entries and suspense account
(a): Journal entries
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b): Suspense account
Particulars Debit amount Particulars Credit amount
Bank account 670 cash account 380
To balance b/d Sales account 270
Balance c/d 20
Total 670 Total 670
CONCLUSION
As per the above report it has been concluded that financial accounting is important part
of any organisation in order to achieve success and track performance of the company. It will be
taken into account in the respect to produce several financial statement to measure performance
of company. When balance did not match that time open suspense account and reconcile by with
the help of this account.
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REFERENCES
Books and Journals
Ball, R., 2013. Accounting informs investors and earnings management is rife: Two questionable
beliefs. Accounting Horizons. 27(4). pp.847-853.
Arouri, M.E.H. And et.al, 2012. Relevance of fair value accounting for financial instruments:
some French evidence. International journal of business. 17(2). p.209.
Bushman, R. M. and Williams, C. D., 2012. Accounting discretion, loan loss provisioning, and
discipline of banks’ risk-taking. Journal of accounting and economics. 54(1). pp.1-18.
Martin, X. and Roychowdhury, S., 2015. Do financial market developments influence
accounting practices? Credit default swaps and borrowers׳ reporting
conservatism. Journal of Accounting and Economics. 59(1). pp.80-104.
Hoopes, J. L., 2013. Financial Accounting Consequences of Temporary Tax Law: Evidence
from the R&D Tax Credit.
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