What are some reasons that cause the balance on the bank statement to differ from the cash balance on the books?

Reasons a Bank Balance Will Differ from a Company's Balance

Some of the reasons for a difference between the balance on the bank statement and the balance on the books include:

  • Outstanding checks
  • Deposits in transit
  • Bank service charges and check printing charges
  • Errors on the company's books
  • Electronic charges and deposits that appear on the bank statement but are not yet recorded in the company's records

How to Document the Differences

Any items that are already recorded in the company's general ledger accounts, but have not yet appeared on the bank statement (outstanding checks, deposits in transit), will be noted as an adjustment to the balance per bank statement. Outstanding checks are a deduction to the balance per bank; deposits in transit are an addition to the balance per bank.

If an item is on the bank statement but has not yet been entered on the books, the items are noted as an adjustment to the balance per books. Bank service charges, check printing charges, and other electronic deductions that are not yet recorded in the company's accounts will become deductions from the cash balance per the books. Electronic deposits not yet recorded by the company will become additions to the cash balance per books.

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