SingaporeAccountingSyllabus dot point

Why does our cash book balance differ from the bank statement, and how do we reconcile them?

Prepare a bank reconciliation statement using unpresented cheques and uncredited deposits

A simple answer to the N(A)-Level Principles of Accounts outcome on bank reconciliation. Why timing differences arise, how unpresented cheques and uncredited deposits are handled, and how to reconcile the cash book to the bank statement.

Generated by Claude Opus 4.89 min answerUpdated 2026-06-06

Reviewed by: AI editorial process; not yet individually human-reviewed

Have a quick question? Jump to the Q&A page

Jump to a section

What this dot point is asking
The answer
Examples in context
Try this

What this dot point is asking

SEAB wants you to prepare a bank reconciliation statement, dealing with unpresented cheques and uncredited deposits. After the cash book is updated, any remaining difference from the bank statement is due to timing. The central insight is that these differences are temporary: the business and the bank have both recorded the same transactions, but at slightly different times, so they will agree once the bank catches up.

The answer

Why the two differ

Even a correct cash book rarely matches the bank statement exactly, because of timing differences. The most common are:

Unpresented cheques: cheques the business has written and recorded, but the receiver has not yet paid in, so the bank has not yet taken the money out.
Uncredited deposits (deposits in transit): money the business has received and recorded, but the bank has not yet added.

The effect on the bank balance

Compared with the cash book:

An unpresented cheque means the bank balance is higher (the money has not left the bank yet).
An uncredited deposit means the bank balance is lower (the money has not been added yet).

Reconciling from the cash book

Starting with the corrected cash book balance:

\text{Cash book} + \text{unpresented cheques} - \text{uncredited deposits} = \text{bank statement}

This shows that the two balances differ only by the timing items, proving the records agree.

The order of work

Update the cash book for bank-statement-only items (covered separately) to get the corrected balance.
Prepare the reconciliation statement for the timing differences.
Confirm the adjusted figures agree.

Worked example

A sole trader has a corrected cash book balance of $\$ 2,400 $(debit). The bank statement shows a different balance because of timing items: unpresented cheques of$ \ $350$ and $\$ 150 $, and an uncredited deposit of$ \ $600$ . Reconcile to find the bank statement balance.

Step 1: Start with the cash book balance

Balance per cash book: $\$ 2,400$.

Step 2: Add unpresented cheques

Total unpresented cheques $= 350 + 150 = \$ 500$. The bank has not paid these yet, so its balance is higher:

2\,400 + 500 = \$2\,900

Step 3: Subtract the uncredited deposit

The $\$ 600$ deposit has not been added by the bank, so its balance is lower:

2\,900 - 600 = \$2\,300

Step 4: State the reconciliation

Bank reconciliation statement	$\$ $
Balance per cash book	2,400
Add unpresented cheques	500
Less uncredited deposit	(600)
Balance per bank statement	2,300

The bank statement balance is $\$ 2,300$, and the difference from the cash book is fully explained by timing.

Examples in context

Example 1. A cheque in the post. A business writes a $\$ 400 $cheque to a supplier on the last day of the month and records it at once, but the supplier banks it only next month. Until then it is an unpresented cheque, so the bank shows$ \ $400$ more than the cash book. The reconciliation adds it back, showing the difference is timing, not a mistake.

Example 2. A late-day deposit. A shop banks $\$ 700 $of takings on the final afternoon, but the bank processes it the next working day. It is an uncredited deposit, so the bank shows$ \ $700$ less than the cash book. Subtracting it in the reconciliation confirms both records are correct and will agree once the deposit clears.

Try this

Q1. State what an unpresented cheque is. [2 marks]

Cue. A cheque the business has written and recorded as a payment, but which the receiver has not yet paid into the bank, so the bank has not yet taken the money out.

Q2. Starting from a cash book balance of $\$ 1,000 $, with unpresented cheques of$ \ $200$ and an uncredited deposit of $\$ 300$, find the bank statement balance. [2 marks]

Cue. $1\,000 + 200 - 300 = \$ 900$.

Q3. Explain why an uncredited deposit makes the bank statement balance lower than the cash book. [2 marks]

Cue. The business has recorded the receipt, but the bank has not yet added it, so the bank balance is temporarily lower until the deposit is processed.

Exam-style practice questions

Practice questions written in the style of SEAB exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.

Original6 marksThe corrected cash book balance is

\

1\,800

(debit). There is an unpresented cheque of

300

and an uncredited deposit of

\

500$. Prepare the bank reconciliation statement starting from the cash book and find the bank statement balance.

Show worked answer →

Start with the cash book balance and adjust for timing differences:

Balance per cash book: $\$ 1,800$
Add unpresented cheque $\$ 300 $(the bank has not yet paid it, so the bank balance is higher):$ \ $2\,100$
Less uncredited deposit $\$ 500 $(the bank has not yet added it, so the bank balance is lower):$ \ $1\,600$
Balance per bank statement: $\$ 1,600$.

What markers reward: adding the unpresented cheque and subtracting the uncredited deposit when starting from the cash book, and arriving at the bank statement balance of $\$ 1,600$.

Original5 marksExplain what an unpresented cheque and an uncredited deposit are, and why they cause a temporary difference between the cash book and the bank statement.

Show worked answer →

An unpresented cheque is a cheque the business has written and recorded as a payment, but which the receiver has not yet paid into their bank, so the bank has not yet taken the money out.

An uncredited deposit is money the business has received and recorded, but which the bank has not yet added to the account.

Both are timing differences: the business has recorded them but the bank has not caught up yet. They are temporary, because once the cheque is presented or the deposit is processed, the two records agree again.

What markers reward: correct definitions of each, and explaining that they are timing differences that disappear once the bank processes them.