When a checking account is opened at a bank，the bank will submit monthly statements to the depositor showing the beginning cash balance, all additions and deductions for the month and the ending cash balance. In addition, the bank will return the paid checks for the month, together with “advice” slips indicating other charges and credits made to the account. We show a relatively simple bank statement below(see Exhibit 12-1).

Almost invariably，the ending balance on the bank statement differs from the balance in the company’s Cash in Bank account. Some reasons for differences are：

(1)    Outstanding checks-checks written and deducted in arriving at the book balance，but not yet presented to the bank for payment

(2)    Deposits not yet credited by the bank-deposits made near the end of the month, processed by the bank after the monthly statement has been prepared. They will appear on next month’s statement.

(3)    Charges made by the bank but not yet reflected on the depositor's books-for example, service and collection charges, NSF checks, repayments of depositor’s bank loans.

(4)    Credits made by the bank but not yet reflected on the depositor's books-collections of notes and drafts for the depositor by the bank.

(5)    Accounting errors made either by the depositor or by the bank.

The bank reconciliation consists of a schedule to account for any of the above differences between the bank statement balance and the book balance. Ordinarily, neither balance represents the cash balance to be shown on the balance sheet. Both are reconciled to an adjusted balance, which will appear on the balance sheet and is the amount that could be withdrawn after all outstanding items have cleared.

A convenient reconciliation form is illustrated below：

If these final amounts do not agree, one should look carefully for reconciling items omitted from the schedule or for possible errors in recordkeeping.

The bank reconciliation is made not only to bring to light transactions that must be recorded，but also to detect errors or irregularities.

Before financial statements are prepared, adjusting entries should be made to bring the Cash account balance into agreement with the correct cash balance shown on the reconciliation. The entries would reflect the collection of the notes receivable and the related collection expenses，reclassification of the NSF (not sufficient funds) checks as accounts receivable and the bank service charge for the month. In our illustration：

New Words, Phrases and Special Terms

Notes to the Text

1.      Both are reconciled to an adjusted balance, which will appear on the balance sheet and is the amount that could be withdrawn after all outstanding items have cleared.

(1)    全句包含一个非限制性的定语从句，which will appear…and is…, 修饰an adjusted balance。关系代词which在从句中作主语，从句的并列谓语用连词and连接起来。

(2)    在并列谓语的后半段isthe amount that…中，又包含一个以关系代词that引导的定语从句，修饰the amount。

(3)    在这一定语从句中，还包含一个用连词after引导的时间状语从句。

2.      The bank reconciliation is made not only to bring to light transactions that must be recorded but also to detect errors or irregularities.

(1)    not only…but also…连接两个不定式结构。谓语动词is made系被动语态。这种被动结构的句型，实际上是把主动结构句型中复合宾语内的宾语变为主语，补语则保持不动而转换成的。

(2)    两个不定式结构中，第一个是复杂结构，其中包含一个修饰不定式to bring to light的宾语transactions的定语从句；第二个是简单结结构，即不定式短语。

READING MATERIAL

THE BANK STATEMENT

In Exhibit 12-1 we show a relatively simple bank statement. Most bank statements list checks paid and other debits in the left-hand section, deposits and other credits in the middle section and cumulative balances (累计余额)in the right-hand section. Code letters (代号字母)are used to identify charges and credits not related to paying checks or making deposits. A legend usually appears at the bottom of the statement explaining the code letters. Although such codes are not standardized from bank to bank，those normally used are easy to understand. In the statement illustrated, the codes used are as follows:

EC--Error correction. Identifies transcription, arithmetic, similar errors and corrections made by the bank.

LS--List of checks. Identifies the total of a batch of checks too numerous to list separately on the statement An adding machine tape listing the individual check amounts usually accompanies each batch of checks listed.

DM--Debit memo. Identifies collection charges, repayment of bank loans, and other special charges made by the bank against the depositor’s account.

SC--Service charge. Identifies the amount charged by the bank for servicing the account. The amount is normally based on the average balance maintained and the number of items processed during the month. Service charges are usually made on small accounts that are not otherwise profitable for the bank to handle.

OD--Overdraft. Indicates a negative or credit, balance in the account.

RT--Returned items. Indicates defective items such as postdated checks or checks without proper endorsement (背书)received from customers and deposited. Sometimes not sufficient fund (NSF) checks charged back to the account are identified with these letters in the statement. NSF checks may also be identified with the letters DM, explained earlier.

In the bank statement illustrated, we see that：

(1)    On December 3, a NSF check $135. 40 charged back to the account is identified by the code letters RT.

(2)    On December 4, the collection charge $0. 50 for a $ 200 note collected by the bank is identified by the code letters DM.

(3)    On December 31，the service charge $5. 00 for the month is identified by the code letters SC.