SingaporeAccountingSyllabus dot point

How does a bank reconciliation statement explain the difference between the cash book and the bank statement?

Prepare a bank reconciliation statement using unpresented cheques and uncredited deposits

A focused answer to the O-Level Principles of Accounts outcome on bank reconciliation. Timing differences (unpresented cheques and uncredited deposits), reconciling the updated cash book to the bank statement, and why it matters.

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

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

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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 using unpresented cheques and uncredited deposits. The central insight is that, once the cash book has been updated, the only remaining differences are timing differences: the business has recorded a transaction that the bank has not yet processed. The statement explains, line by line, why the two balances differ and proves they will agree.

The answer

The two timing differences

After the cash book is updated, the differences left are purely timing:

Difference	What it is	Effect
Unpresented cheque	A cheque the business paid out and recorded, not yet taken by the bank	Cash book lower than bank
Uncredited deposit	Money the business paid in and recorded, not yet added by the bank	Cash book higher than bank

Both arise because the business records the transaction first and the bank a little later, so they self-correct.

The reconciliation statement (from the cash book)

Starting from the updated cash book balance, work towards the bank statement balance:

Add unpresented cheques - the bank has not yet reduced its balance, so its figure is higher.
Less uncredited deposits - the bank has not yet added them, so its figure is lower.

\text{Bank statement balance} = \text{Updated cash book balance} + \text{Unpresented cheques} - \text{Uncredited deposits}

(You can also start from the bank statement and work back to the cash book, reversing the signs.)

Why reconcile

A bank reconciliation:

Checks accuracy - it confirms the cash book and the bank agree once timing is allowed for.
Finds errors and omissions - in either the cash book or the bank's records.
Deters fraud - regular reconciliation makes missing or altered entries visible.

Worked example

After updating, a cash book shows a debit balance of $\$ 4,200 $. The bank statement balance is$ \ $4,650$ . The only differences are unpresented cheques of $\$ 700 $and an uncredited deposit of$ \ $250$ . Prepare the reconciliation statement from the cash book.

Step 1: Start from the updated cash book balance

Begin with the corrected cash book figure: $\$ 4,200$ (debit, money in the bank).

Step 2: Add unpresented cheques

The $\$ 700 $of cheques have reduced the cash book but the bank has not yet paid them, so the bank balance is higher. Add$ \ $700$ : $4\,200 + 700 = \$ 4,900$.

Step 3: Deduct the uncredited deposit

The $\$ 250 $deposit has raised the cash book but the bank has not yet added it, so deduct$ \ $250$ : $4\,900 - 250 = \$ 4,650$.

Step 4: Present and check

Bank reconciliation statement	$\$ $
Balance per updated cash book	4,200
Add unpresented cheques	700
	4,900
Less uncredited deposit	(250)
Balance per bank statement	4,650

The statement reconciles the $\$ 4,200 $cash book balance to the$ \ $4,650$ bank balance, confirming both are correct once timing is allowed for.

Examples in context

Example 1. Month-end cheques in transit. A business posts supplier cheques totalling $\$ 1,200 $on the last day of the month. They are in the cash book but the suppliers have not yet banked them, so the bank statement is$ \ $1,200$ higher. The reconciliation adds these unpresented cheques, showing the difference is pure timing and will vanish once the cheques clear.

Example 2. Catching a slip. A reconciliation will not balance by $\$ 90 $. Investigating, the business finds a cheque entered in the cash book as$ \ $540$ but written for $\$ 450$. The reconciliation exercise surfaced an error in the cash book that would otherwise have gone unnoticed, which is one of its main purposes.

Try this

Q1. Define an unpresented cheque. [2 marks]

Cue. A cheque the business has written and recorded as paid out, but which the payee has not yet banked, so the bank has not yet reduced the account.

Q2. Starting from a cash book balance of $\$ 2,000 $, with unpresented cheques$ \ $500$ and an uncredited deposit $\$ 300$, state the bank statement balance. [2 marks]

Cue. Bank balance $= 2\,000 + 500 - 300 = \$ 2,200$.

Q3. State one reason a business prepares a bank reconciliation. [1 mark]

Cue. To check the cash book and bank records agree once timing is allowed for (and to find errors or deter fraud).

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.

Original8 marksAfter updating, a cash book shows a debit balance of

\

2\,885

. The bank statement shows a balance of

3\,485

(in the business's favour). The differences are: cheques drawn but not yet presented

\

900

; a deposit not yet credited by the bank

300

. Prepare the bank reconciliation statement starting from the cash book balance.

Show worked answer →

Bank reconciliation statement	$\$ $
Balance per updated cash book	2,885
Add unpresented cheques	900
	3,785
Less uncredited deposit	(300)
Balance per bank statement	3,485

Unpresented cheques have reduced the cash book but not yet the bank, so the bank balance is higher; they are added to reach the bank figure. The uncredited deposit has increased the cash book but not yet the bank, so it is deducted. The statement reconciles $\$ 2,885 $to$ \ $3\,485$ .

Markers reward adding unpresented cheques, deducting the uncredited deposit, and arriving at the bank statement balance of $\$ 3,485$.

Original5 marksExplain what is meant by an unpresented cheque and an uncredited deposit, and why each causes 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 (credited in the cash book), but which the payee has not yet paid into their bank, so the bank has not yet taken it out of the business's account. The cash book is lower than the bank balance until the cheque is presented.

An uncredited deposit (a deposit in transit) is money the business has received and recorded as paid in (debited in the cash book), but which the bank has not yet added to the account. The cash book is higher than the bank balance until the bank credits it.

Both are timing differences: the business records the transaction first, the bank records it a little later, so the two records will agree once the bank catches up.

Markers reward correct definitions and explaining that each is a timing difference that self-corrects once the bank processes it.