Bank Account
Code: 1112Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Debit |
Definition
Cash balances held in banks
Note: This account may be broken down into sub-ledgers as needed (e.g., Commercial bank Account, Dubai Islamic Bank Account/HSBC Account , and also can write with account number, Like HSBC NO..........).
Common Journal Entries
Dr. Bank Account
Cr. Cash in Hand
Dr. Accounts Payable
Cr. Bank Account
Dr. Bank Account
Cr. Accounts Receivable
Dr. Salaries Expense
Cr. Bank Account
📐 IFRS vs US GAAP Accounting Treatment
IFRS allows netting overdrafts; GAAP generally does not
❓ Frequently Asked Questions
A: Bank reconciliation is the process of matching the company\'s book balance for the bank with the balance on the bank statement. It involves adding deposits in transit, deducting outstanding checks, adding bank income, deducting bank charges, and correcting any errors. The goal is to arrive at a single, agreed-upon balance.
A: Outstanding checks are checks that have been issued and recorded in the company\'s books but have not yet been presented to the bank for payment, so they do not yet appear on the bank statement. They are deducted from the book balance during reconciliation.
A: Deposits in transit are cash or checks that have been deposited and recorded in the company\'s books but have not yet appeared on the bank statement because the bank has not yet processed them. They are added to the bank statement balance during reconciliation.
A: Bank charges such as account fees, transfer fees, and check issuance fees are often not known to the company until the bank statement is received. They are recorded with the entry: Dr. Bank Charges Expense, Cr. Bank Account.
A: A bank overdraft is a short-term credit facility that allows a company to withdraw more than its current account balance. It is usually repayable on demand and has a higher interest rate. A bank loan is a specific amount borrowed, repaid in installments over a set period with a lower interest rate.