Update the cash book from a bank statement
Record bank-originated items missing from the cash book before preparing a bank reconciliation.
Cambridge IGCSE Accounting 0452 / (9–1) 0985, 2027–2029 Version 1. These lessons follow the 2027–2029 syllabus only; the separate 2026 syllabus update is not yet mapped. Written practice is self-checked, not an official Cambridge grade. Full timed-paper practice and human subject-teacher review remain pending.
Before you begin
- No previous accounting study is assumed. Keep the business, transaction and accounting period in view, and distinguish a resource, a claim and a performance result.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Which item normally requires a cash-book update?
What you will learn
- Use a bank statement as evidence of transactions
- Update the cash book for bank charges, interest and transfers
- Distinguish a cash-book omission from a bank error
Record items already processed by the bank
Compare the cash-book bank column with the bank statement. Add items on the statement that the business has not recorded: charges, interest paid or received, customer credit transfers, direct debits, standing orders and bank corrections to the business's own cash-book entries.
A bank error is different: the bank's statement is wrong, so contact or notify the bank and show it as a reconciling item rather than entering a false transaction in the cash book.
Recalculate the corrected cash-book balance
Start with the recorded bank balance, add omitted receipts and subtract omitted payments. Confirm that each item belongs to the business, is not already recorded and is supported by the statement or payment authority.
Digital feeds can surface transactions quickly, but check duplicate imports, pending versus completed transfers and bank fees. Automatic import does not replace reconciliation or source checks.
Pause and explain
A $35 bank charge is missing from the cash book. What is its effect on the positive bank balance and profit?
Worked example
The cash book shows a positive bank balance of $2,300. The statement shows bank charges $25, interest received $40, a customer transfer $200 and a standing order $75, none recorded. Find the corrected cash-book balance.
Show the worked solution
- Start at $2,300.
- Add $40 interest and $200 transfer; subtract $25 charges and $75 standing order.
- 2,300 + 40 + 200 − 25 − 75 = $2,440.
Answer The corrected cash-book bank balance is $2,440 positive.
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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.
A cash book has a positive $1,850 bank balance. Add statement items: interest received $28, bank charges $16 and a customer's credit transfer $240. Find the corrected balance.
Give me a hint
Add receipts and subtract charges.
Compare my reasoning
- Add 28 and 240; subtract 16.
- 1,850 + 28 + 240 − 16 = $2,102.
- Record each item once in the cash book.
The corrected bank balance is $2,102 positive.
Look for these in your work
- Signs correct
- Balance correct
- Duplicate check noted
The bank statement shows a $120 standing order, but the cash book already records it. What adjustment should be made now?
Give me a hint
Check the cash-book entry against the statement before making another posting.
Compare my reasoning
- The statement item has already been recorded in the business books.
- Do not enter it again.
- Use it as a matched item when comparing the statement and cash-book records.
No second cash-book adjustment is needed; mark the existing entry as matched to avoid duplicating the payment.
Look for these in your work
- Existing entry recognised
- Duplicate avoided
- Reconciliation step stated
The statement includes a $90 payment that the bank says was made in error. Explain whether to update the cash book or reconcile it as a bank error.
Give me a hint
Ask whether the business authorised or made the payment.
Compare my reasoning
- The business did not make or authorise the payment.
- Do not record it as a genuine business payment in the cash book.
- Notify the bank and include the $90 bank error as a reconciling item until corrected.
Do not debit a business expense or credit Bank for a payment the business did not make. Notify the bank and show the $90 error in the reconciliation until corrected.
Look for these in your work
- Business transaction distinguished
- Cash book protected
- Bank error treated correctly
Common mistakes
- Adding a standing order as a receipt
- Recording a bank error as if the business made the transaction
- Updating an item already present in the cash book a second time
What can you explain now?
A bank charge is on the statement but absent from the cash book. What should be updated?
Compare with the explanation
Credit Bank and debit Bank charges expense
The bank asset decreases and the expense is recorded.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Which statement items update the cash book, and which are timing differences for the reconciliation?
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.