Walk me through how you prepare a bank reconciliation statement.

What the interviewer wants to hear

• Compare the cash book with the bank statement line by line
• Identify timing differences such as unpresented cheques and uncredited deposits
• Book items in the cash book that only the bank knows, like charges, interest or direct credits
• Reconcile the adjusted balances to each other
• Investigate and follow up old or unexplained items

Model answer

I start with the closing balance in the cash book and the closing balance on the bank statement for the same date. I tick off matching entries on both sides; in Tally or Zoho Books this is mostly done by matching bank feed lines. Items only on the bank statement, such as bank charges, interest, direct customer deposits or ECS debits, are things the books do not know yet, so I record them in the cash book. Items only in the books are usually timing differences: cheques issued but not yet presented, and deposits not yet credited by the bank. After updating the cash book, I prepare the statement: adjusted cash book balance plus unpresented cheques, minus deposits in transit, should equal the bank balance. Finally I review anything older than a month, like stale cheques, and follow it up rather than carrying it forever.

More easy Accountant questions

• Explain double-entry bookkeeping to someone new, using a simple example.
• What is the difference between cash basis and accrual basis accounting, and why do companies use accrual?
• Explain CGST, SGST and IGST. When does each apply?
• How does a transaction travel from a source document all the way to the financial statements?
• What is depreciation and why do businesses charge it?
• Explain input tax credit under GST with a simple example.
• What is the difference between a provision and a reserve?
• How would you handle a weekly vendor payment run?
• Name the main financial statements and explain how they are linked.