Kirsty Harris owns Harris Linen Hire. Kirsty asks you to explain how the following differences between the bank statement and the cash at bank ledger account should be treated: (1) an entry on the bank statement for a dishonoured cheque, (2) unpresented cheques, and (3) an outstanding deposit.

Kirsty needs to understand that one cause of reconciling items is timing differences. The first item generates a difference between the bank records and the ledger because Harris Linen Hire has not yet recorded the dishonoured cheque. Items (2) and (3) are reconciling items because the bank has not recorded the transactions.