Update the cash book before a bank reconciliation
Record valid bank-statement items missing from the cash book, then carry forward its corrected balance.
Section 1.4 · Reconciliation and verification
Cambridge International AS & A Level Accounting 9706, 2026–2028 syllabus, Version 2. These lessons cover Topic 1.4 only. Practice is self-checked, not an official Cambridge grade; the separately published 2029 syllabus, timed papers and human subject-teacher review remain outstanding.
Before you begin
- Use double-entry, ledger and trial-balance knowledge from Topic 1.2. Reconciliations compare records with independent or separately maintained evidence; an unexplained difference needs investigation.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
In a cash book, does a receipt increase or decrease the bank balance?
What you will learn
- Update a cash book for items first shown by the bank
- Distinguish timing differences from omitted cash-book entries
- Calculate the updated cash-book balance
Enter bank-originated items in the cash book
A bank statement may show bank charges, direct debits, standing orders, interest, direct credits or dishonoured cheques before the business has recorded them. Add these items to the cash book using the correct debit or credit side and account, then balance it again.
A receipt increases the bank balance and is a debit in the cash book; a payment reduces it and is a credit. A bank charge or direct debit reduces bank. A direct customer credit or interest received increases bank. A dishonoured receipt reverses the earlier bank receipt and restores the customer's debt.
Leave timing differences for the reconciliation
Unpresented cheques and deposits not yet credited are already recorded by the business but not yet processed by the bank. They do not need a second cash-book entry. Show them as timing differences on the bank reconciliation statement.
After updating, label the cash-book balance and date clearly. If the balance is an overdraft, keep the sign and direction explicit rather than treating every negative amount as a positive bank asset.
Pause and explain
An unpresented cheque is already in the cash book but has not cleared the bank. Where does it belong?
Worked example
The cash book has a debit bank balance of $4,820. The bank statement shows charges of $45, a direct debit of $300 and a customer transfer of $760, all not yet recorded. Calculate the updated balance.
Show the worked solution
- Start with the $4,820 debit balance.
- Deduct bank charges $45 and direct debit $300; add the direct credit $760.
- Updated balance = 4,820 − 45 − 300 + 760 = $5,235 debit.
Answer The updated cash-book bank balance is $5,235 debit.
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Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
Cash book debit balance is $2,350. Bank statement items not recorded are bank fees $28, interest received $12 and a dishonoured customer cheque $180. Find the updated cash-book balance.
Give me a hint
Subtract fees and the reversed receipt; add interest.
Compare my reasoning
- Start with $2,350 debit.
- Updated balance = 2,350 − 28 + 12 − 180.
- The result is $2,154 debit.
Updated cash-book bank balance: $2,154 debit.
Look for these in your work
- Each item signed correctly
- Calculation correct
- Balance direction stated
Cash book shows an overdraft of $1,400. The statement has an unrecorded direct debit of $250 and a customer direct credit of $700. What is the updated cash-book balance?
Give me a hint
A direct debit worsens the overdraft; a credit reduces it.
Compare my reasoning
- Start at −$1,400.
- Apply −250 + 700 = +$450.
- Updated balance = −1,400 + 450 = −$950, an overdraft.
The updated balance is a $950 overdraft.
Look for these in your work
- Signs applied
- Net change calculated
- Overdraft identified
A bookkeeper adds an unpresented cheque to the updated cash book and also deducts it in the bank reconciliation. Explain the problem.
Give me a hint
Check whether the business has already recorded the payment.
Compare my reasoning
- The cheque is already included in the cash-book balance.
- Subtracting it again in the cash book duplicates the payment.
- Keep it as a timing difference between the adjusted book balance and bank statement.
The cheque would be counted twice. Do not change the cash book again; show the unpresented cheque only as a timing difference on the reconciliation.
Look for these in your work
- Duplicate effect identified
- Cash-book action corrected
- Timing difference placed correctly
Common mistakes
- Putting unpresented cheques into the cash-book update a second time
- Crediting bank charges in a way that increases the bank balance
- Ignoring a dishonoured receipt and leaving the customer balance reduced
What can you explain now?
A bank charge appears on the statement but not in the cash book. What should be done first?
Compare with the explanation
Credit bank in the cash book and debit bank charges expense
The bank has reduced the account; record the payment as an expense.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Name two items that update a cash book and two that remain timing differences.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.