11 SENIOR HIGH SCHOOL

FABM 2
Quarter 4 – Module 1
Bank Reconciliation Statement

NegOr_Q4_FABM211_Module1_v2
FABM 2 – Grade 11
Alternative Delivery Mode
Quarter 4 – Module 1: Bank Reconciliation Statement
Second Edition, 2021

Republic Act 8293, section 176 states that: No copyright shall subsist in any
work of the Government of the Philippines. However, prior approval of the
government agency or office wherein the work is created shall be necessary for
exploitation of such work for profit. Such agency or office may, among other things,
impose as a condition the payment of royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand

names, trademarks, etc.) included in this module are owned by their respective
copyright holders. Every effort has been exerted to locate and seek permission to
use these materials from their respective copyright owners. The publisher and
authors do not represent nor claim ownership over them.

Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Writer: Chona V. Bontigao
Editor: Cathyrine T. Rosales
Reviewer: Maria Acenith D. Pastor
Layout Artist: Helner D. Taghap
Management Team: Senen Priscillo P. Paulin, CESO V Elisa L. Baguio, EdD
Joeliza S. Miguel-Arcilla EdD, CESE Rosela R. Abiera
Marcelo K. Palispis, JD, EdD Maricel S. Rasid
Nelita S. Ragay, EdD Elmar L. Cabrera

Printed in the Philippines by ________________________

Department of Education –Region VII Schools Division of Negros Oriental

Office Address: Kagawasan, Ave., Daro, Dumaguete City, Negros Oriental

Tele #: (035) 225 2376 / 541 1117
E-mail Address: [email protected]
Introductory Message

This Self-Learning Module (SLM) is prepared so that you, our dear

learners, can continue your studies and learn while at home. Activities,
questions, directions, exercises, and discussions are carefully stated for you
to understand each lesson.

Each SLM is composed of different parts. Each part shall guide you
step-by-step as you discover and understand the lesson prepared for you.

Pre-tests are provided to measure your prior knowledge on lessons in

each SLM. This will tell you if you need to proceed on completing this
module or if you need to ask your facilitator or your teacher’s assistance for
better understanding of the lesson. At the end of each module, you need to
answer the post-test to self-check your learning. Answer keys are provided
for each activity and test. We trust that you will be honest in using these.

In addition to the material in the main text, Notes to the Teacher are
also provided to our facilitators and parents for strategies and reminders on
how they can best help you on your home-based learning.

Please use this module with care. Do not put unnecessary marks on
any part of this SLM. Use a separate sheet of paper in answering the
exercises and tests. And read the instructions carefully before performing
each task.

If you have any questions in using this SLM or any difficulty in

answering the tasks in this module, do not hesitate to consult your teacher
or facilitator.

Thank you.

i NegOr_Q4_FABM211_Module1_v2
 I

This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at our own pace and time. You will be enabled to process
the contents of the learning resource while being an active learner.

In this module you will learn about bank reconciliation statements. You will be able
identify its nature, purpose, and method on how to do bank reconciliation.
After reading and understanding the content of this module the learners shall be able
to explain bank reconciliation statement and identify common reconciling items and describe
each of them.

1 NegOr_Q4_FABM211_Module1_v2
 I

Task 1

MULTIPLE CHOICE. Read and answer the questions below. Write the letter of the correct
answer in your notebook or in a clean sheet of paper.
1. This is a report which compares the bank balance as per company’s accounting
records with each balance stated in the bank statement.
A. Bank Statement
B. Bank Reconciliation Statement
C. Cash Book
D. Financial Statement
2. When checks are recorded in the company’s cash account but have not yet cleared and
presented to the bank by the payee, this check is called?
A. Managers check
B. Post-dated check
C. Outstanding check
D. Bouncing check
3. _________________ are checks issued by the firm that have not yet been presented to
its bank for payment.
A. Unpresented Checks
B. Bouncing Checks
C. Outstanding checks
D. Post-dated checks
4. NSF like NSF check stands for _________________________.
A. No Sufficient Funds
B. Not Sufficient Funds
C. No Standing Funds
D. None of the above
5. What are these charges made by the bank to the company for banking services used?
A. Generally Accepted form of money.
B. Includes coins, paper notes.
C. May include USD, PHP, and other.
D. Bank Charges

2 NegOr_Q4_FABM211_Module1_v2
 6. Which is true about bank reconciliation?
A. A process of matching the balances in an entity’s accounting records for cash
account to the corresponding information on a bank.
B. To attain the differences between two records – company’s books and bank
books.
C. Should be completed at regular intervals for all bank accounts.
D. All of these.
7. Bank reconciliation is important because ________________
A. It is part of the accounting cycle.
B. It will detect errors from the company’s accounting records and its bank.
C. It is needed yearly.
D. None of the above.
8. ________________ this may result to non-recording of current transactions in real
time.
A. Time deficiency
B. Time-lags
C. Untimely
D. Noncurrent
9. The following are common reconciling items except for _____________.
A. Interest earned
B. Adjustments to checks and deposits
C. Cash deposits
D. Service Charges
10. Which of the following are found in the bank reconciliation statement?
A. Outstanding checks
B. Adjusted balance
C. Title of statement
D. All of these
E.

’s In

Task 2
In your notebook, define the following:
1. General Ledger - ___________________________________________________
2. Subsidiary ledger - ___________________________________________________
3. Bank Statement - ___________________________________________________
4. Outstanding check - ___________________________________________________
5. Notes Receivable - ___________________________________________________
6. Interest - ___________________________________________________
7. Bank Deposits - ___________________________________________________
8. Bank charges - ___________________________________________________

3 NegOr_Q4_FABM211_Module1_v2
 ’s New

Task 3
Answer the following questions in your notebook.

1. What is bank reconciliation?

2. What is bank reconciliation statement?

is It

Bank Reconciliation Statement

Reconciliation is an accounting process that compares two sets of records to check that
figures are correct and in agreement. To reconcile in accounting is to check and balance the
accounting records of the company using their books of accounts, ledgers – general and
subsidiary, journals and other documents that are interconnected with the different
transactions in the company.

Companies use reconciliation to prevent balance sheet errors on their financial

accounts, check for fraud, and to reconcile the general ledger. In double-entry accounting,
each transaction is posted as both debit and a credit. Individuals also may use account
reconciliation to check the accuracy of their checking and credit card accounts.

What is Bank Reconciliation?

Bank reconciliation statements ensure payments have been processed and cash
collections have been deposited into the bank. The reconciliation statement helps identify
difference between the bank balance and book balance, in order to process necessary
adjustments or corrections.

Nature of Bank Reconciliation Statement

It is normal for a company’s bank balance as per accounting records to differ from the
balance as per bank statement. The difference between these figures is the reasons why
companies prepare bank reconciliation statements. Bank reconciliation statement is a report
which compares the bank balance as per company’s accounting records with the balance
stated in the bank statement.

4 NegOr_Q4_FABM211_Module1_v2
Why do bank reconciliation?
A bank reconciliation statement summarizes banking and business activity, reconciling
an entity’s bank account with its financial records. Bank reconciliation statements confirm
that payments have been processed and cash collections have been deposited into a bank
account. All fees charged on an account by a bank must be accounted for on a reconciliation
statement. After all adjustments, the balance on a bank reconciliation statement should equal
the ending balance of the bank account.

Completing a bank reconciliation statement requires using both the current and the
previous month’s statements, including the closing balance of the account. The accountant
typically prepares the bank reconciliation statement using all transactions through the previous
day, as transactions may still be occurring on the actual statement date (Kagan, 2020).
There are two common causes of the discrepancy in figures:

• Time lags that prevent one of the parties from recording the transaction in the same
period as the other party.
Example: A bank statement for the month ended August 2020 and then there is a cash
payment collected from client late afternoon at 4:00 pm. The company can no longer
deposit it in their bank account since most of the banks are closed at 3:00 pm. The cash
transaction is recorded in the company’s accounting records but not reflected as bank
deposit.

• Errors by either party in recording transactions.

Example: A check or cash deposit in the amount of ₱20,000 is recorded as ₱2,000. In
this case a big difference is found between the company’s record and the bank records.
This needs reconciliation.

Importance of Bank Reconciliation Statement

A time- to time review of the company’s account can help identify problems they get
out of hand.
1. Catch deception before it’s too late. Deception or fraud is very common to bank
accounts. There are times that checks are duplicated, and some are even issued without
authorization. Money laundering can also happen in the company where unauthorize
transfers and withdrawals or missing deposits took place within your bank accounts.
2. Prevent Administrative Problems. Reconciliation helps in maintaining the credibility
of the company’s cash accounts and receivables. This contributes to the monitoring in
the cash inflows and outflows in the company.
3. If the bank balance appearing in the accounting records can be confirmed to be correct
by comparing it with the bank statement balance, it provides added comfort that the
bank transactions have been recorded correctly in the company records.

There are three methods of preparing bank reconciliation statement, these are:

5 NegOr_Q4_FABM211_Module1_v2
 1. Adjusted method wherein the balances per bank and per book are separately
determined
2. Book to Bank Method wherein the book balance is adjusted to agree with the bank
balance.
3. Bank to Book Method wherein the bank balance is adjusted to agree with book
balance.

Below is an example of a Bank Reconciliation Statement using Adjusted method.

ABC Company
Bank Reconciliation Statement
January 31, 2020

Unadjusted Book Balance xxxx Unadjusted Bank Balance xxxx

Deposit in Transit xxxx
Bank Debit Memo Outstanding Checks xxxx
NSF Check xxxx
Printing Charge xxxx
Bank Credit Memo
Collection xxxx
Errors xxxx _ _
Adjusted Book Balance xxxx Adjusted Book Balance xxxx _
What are the items to reconcile?

The following are the common reconciling items:

1. Interest earned. This among is recorded in the bank statement and must be added to the
company’s book balance.
2. Service charges. These amounts are charged by the bank for its services in maintaining
the checking account and must be subtracted from the company’s book balance.
3. Adjustments to deposits. The company may sometimes record a deposit incorrectly, or
it may deposit a check for which there are not sufficient funds (NSF). If so, and the
bank spots the error, the company must adjust its books balance to correct the error.
The bank may also charge an NSF fee, which must be recorded in the company’s
books.
4. Adjustments to checks. The company may occasionally record a check incorrectly. If
so, and the bank spots the error, the company must adjust its book balance to correct
the error.

There are occasions where only the bank commits error, in this case only the bank will
correct its error without adjusting the company’s book balance.
__________________________
https://www.accountingtools.com/articles/what-is-a-book-balance.html

6 NegOr_Q4_FABM211_Module1_v2
 ’s More

Task 4
Answer the following questions below. Write your answer in your notebook or in a clean
sheet of paper.
1. Why bank reconciliation statement important?
2. What might happen to companies if they do not perform bank reconciliation?

Criteria for Scoring:

Content - 5 points
Organization - 5 points
Clarity of idea - 5 points
Total - 15 points

I Have Learned

Task 5

Direction: In your notebook or in a clean sheet of paper, complete the following

statements.

1. I have learned that

_____________________________________________________________________
_____________________________________________________________________

2. I have realized that______________________________________________________

_____________________________________________________________________

3. I will apply what I have learned ___________________________________________

_____________________________________________________________________

7 NegOr_Q4_FABM211_Module1_v2
 I Can Do

Task 6
Direction: Give the common reconciling items and describe each. Write your answer in your
notebook or in a clean sheet of paper.
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

Criteria for Scoring:

Content - 5 points
Organization - 5 points
Clarity of idea - 5 points
Total - 15 points

Task 7
A. Direction: True or False. Write TRUE if the statement is correct, otherwise FALSE.
Write your answer in your notebook or in a clean sheet of paper.
1. Interest earned is added to the checking account balance and in the bank
statement.
2. Bank reconciliation is done in a monthly basis.
3. Bank reconciliation is not required in every company.
4. Reconciliation is important to check for errors and not correct them.
5. Bank reconciliation statement does not follow any format.

8 NegOr_Q4_FABM211_Module1_v2
B. Matching type. Match your answers in column A to the choices in column B. Write
the letter of the correct answer in your notebook or in a clean sheet of paper.

Column A Column B
1. Reconciliation a. Document owned and used by banks
2. Bank Reconciliation b. Mode of preparation for Bank Reconciliation
3. NSF Checks Statement
4. Bank Statement c. A report that compares accounting records
5. Outstanding checks and bank statements
6. Bank errors d. The most vulnerable asset of an entity.
7. Cash e. Used to compare with Bank Statements
8. Monthly Preparation f. No funds available in the checking account
9. Bank Reconciliation statement g. Errors committed by banks
10. Accounting records h. Uncleared checks
i. Check and balance between bank statements
and accounting records
j. To check and balance

9 NegOr_Q4_FABM211_Module1_v2
 NegOr_Q4_FABM211_Module1_v2 10
What I Know
1. b
2. c
3. a
4. a
5. d What's New
6. d Suggested Answers
7. b 1. A bank reconciliation is the process of matching
8. b the balances in an entity's accounting records for a
9. c cash account to the corresponding information on a
bank statement.
10. d
2. A bank reconciliation statement is a summary of
banking and business activity that reconciles an
What's In entity's bank account with its financial records.
Suggested answers
What's more
1.General Ledger - is the master set of accounts that
summarize all transactions occurring within an Answers may vary
entity.
What I have learned
2.Subsidiary ledger - is a group of similar accounts
whose combined balances equal the balance in a Answers may vary
specific general ledger account.
What I can do
3.Bank Statement - is a document that is issued by a
bank once a month to its customers, listing the Answers may vary
transactions impacting a bank account.
Assessment
4.Outstanding check - is a check payment that is A.
written by someone,but has not been cashed or 1. True
deposited by the payee. 2. True
3. False
5.Notes Receivable - is an account on the balance 4. False
sheet usually under the current assets section if its 5. False
life is less than a year B.
1. j
6.Interest - is the amount of money a lender or 2. i
financial institution receives for lending out money. 3. f
4. a
7.Bank Deposits - consist of money placed into 5. h
banking institutions for safekeeping. These deposits 6. g
7. d
are made to deposit accounts such as savings
8. b
accounts, checking accounts, and money market 9. c
accounts. 10. e
8.Bank charges - A bank charge is a fee assessed to an
account by a financial institution.
References

Book
Reymond Patrick P. Monfero, C. S. (2016). Teachers Guide for Senior High School
Fundamentals of Accountancy, Business, and Management 2. Quezon City:
Commission on Higher Education.

Online site:
Kagan, J. Bank Reconciliation Statement. 2020. Accessed on January 10, 2021.
https://www.investopedia.com/terms/b/bankreconciliation.asp

Accounting Tools. Book Balance. 2021. Accessed on January 10, 2022

https://www.accountingtools.com/articles/what-is-a-book-balance.html

11 NegOr_Q4_FABM211_Module1_v2