Question 2

Stella a friend of yours recently started her own business. She was told that she needs to perform a bank reconciliation every month, but she does not understand what this entails.

Q.2.1.1 Briefly explain to Stella the bank reconciliation process

Q.2.1.2 Stella has heard that there are 2 types of awareness differences, she would like to know what they are. Provide the 2 classifications of awareness differences

Q.2.1.3 Explain to Stella why there would be differences between the transactions recorded by the business and the bank

Q.2.1.4 Provide 1 example of each of the following:

1. Error committed by the bank
2. Error committed by the business
3. Timing differences where the business is not aware of a particular transaction
4. Timing differences where the bank is not aware of a particular transaction

Q.2.1.5 Explain to Stella the difference between a stop order and debit order