Timing differences : When accounting records are maintained by both bank and business, time interval occurs and thus cash differences occur between cash amount in the bank statement and the cash account in the company books. These time intervals are referred as timing differences. To identify: The timing differences related to book side or the bank side of bank reconciliation.

Question

For each timing difference listed, identify whether the difference would be reported on the book side of the reconciliation or the bank side of the reconciliation. In addition, identify whether the difference would be an addition or subtraction. Is it an Is book or bank addition or Timing difference affected? subtraction? a. Deposit in transit b. Bank collection c. Debit memorandum from bank d. EFT cash receipt e. Outstanding checks f. $1,000 deposit erroneously recorded by the bank as $100 g. Service charges h. Interest revenue i. $2,500 cash payment for rent expense erroneously recorded by the business as $250 j. Credit memorandum from bank

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Chapter 7, Problem 7.7SE

To determine

Timing differences: When accounting records are maintained by both bank and business, time interval occurs and thus cash differences occur between cash amount in the bank statement and the cash account in the company books. These time intervals are referred as timing differences.

To identify: The timing differences related to book side or the bank side of bank reconciliation.

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