Question

Why might a bank statement reflect a balance that is larger than the balance recorded in the depositor's books? What could cause the bank balance to be smaller than the book balance? In your on words

Answer 1

The Balance in Bank Statement is higher due to following reasons:

Outstanding checks not recorded in the bank statement.

Direct collection from customer.

Collection of notes receivable along with the interest.

Interest allowed on balance by the bank.

The reasons fo bank balance to be lower is as follows:

Deposits in transit not recorded in bank statement.

Insurance and any other direct payment made by bank.

Service charges levied by bank.

Interest charged by the bank.