IGCSE Accounting: Bank reconciliation (Cambridge 0452)

Syllabus edition note. This resource follows the Cambridge IGCSE Accounting 0452 syllabus (and Cambridge O Level Accounting 7707, which has the same subject content for the same series) for exams in 2027, 2028 and 2029 (version 1), first examined in the March 2027 series in India and the June 2027 series elsewhere. If you sit 0452 in November 2026, you sit the 2026 syllabus (version 2), which differs: Paper 1 has 35 multiple-choice marks in 1 hour 15 minutes, not 40 marks in 1 hour 30 minutes; Topic 7 is “Accounting principles and policies”, without 7.2 Ethical considerations or 7.3 Technology and sustainability; 4.4 is “Irrecoverable debts and provision for doubtful debts”; income statements are named instead of statements of profit or loss; three-column running balance accounts are not required; Clubs and societies is 5.4 and Manufacturing accounts 5.5; and 6.3 is “Inter-firm comparison”. For this topic, the 2026 syllabus also lists dividends among the cash book updates, and it does not include the impact of digital transactions on bank reconciliation or on control accounts. If you sit in November 2026, work from the 2026 syllabus on the Cambridge International website.

This guide teaches syllabus section 3.3 Bank reconciliation from the Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029. It sits inside Topic 3, Verification of accounting records, and goes deeper than the overview in Verification of Accounting Records. The syllabus does not split 3.3 into tiers, so everything here applies to every candidate.

Use the revision notes for quick recall and the practice questions to test yourself. The wider topic has its own practice set and revision notes. For the whole course see the Cambridge IGCSE Accounting hub and the printable checklist. If you are not sure where you stand, take a free diagnostic first.

What 3.3 asks you to do

Syllabus point	Where it is covered below
Use and purpose of a bank statement	“The bank statement”
Update the cash book for six kinds of item: charges, interest paid, interest received, credit transfers, direct debits and standing orders, plus corrections of errors	“Updating the cash book” and the worked example
Purpose and preparation of a bank reconciliation statement, including bank errors, uncredited deposits and unpresented cheques	“Why the balances differ”, the worked example and “Which way does each item go?”
Impact of digital business transactions on the bank reconciliation process	“Digital business transactions”

The bank statement

A bank statement is a record, produced by the bank, of every payment into and out of the business’s bank account over a period, with a running balance. The business did not write it, which is exactly why it is useful.

Use. The business compares the statement with its own cash book, line by line.

Purpose. It gives an independent check on the cash book. Through it the business can:

• confirm that receipts and payments in the cash book really reached or left the account;
• find entries the bank has made that the firm has not yet written up, such as charges or a transfer from a customer;
• spot mistakes in the cash book or by the bank;
• find out how much money the business can safely spend;
• deter and detect fraud, since a payment nobody authorised will show on the statement.

A statement may label columns “paid out” and “paid in” or use debit and credit from the bank’s own point of view. Read the words and the direction of the money, not just the heading. A favourable balance on your statement is money the bank holds for you.

Why the balances differ

The cash book bank column and the bank statement describe the same account, yet their closing balances are rarely equal. There are four causes, and each needs a different response.

Cause	Example	What you do
The bank has recorded it and you have not	Bank charges, interest, credit transfer, direct debit, standing order	Enter it in the cash book
You recorded it wrongly	Cheque written for $315 but entered as 351	Correct the cash book
Timing: you recorded it and the bank has not yet	Unpresented cheques, uncredited deposits	Show on the reconciliation statement only
The bank recorded it wrongly	A payment taken from your account by mistake	Show on the reconciliation statement and tell the bank

An unpresented cheque is a cheque you have issued and entered in the cash book which the bank has not yet paid. An uncredited deposit (also called an outstanding lodgement) is money you have paid in and entered in the cash book which the bank has not yet added to your account. Neither is a mistake. Both disappear without any action once the bank catches up.

Updating the cash book

Before reconciling, bring the cash book up to date. Each item below is entered in the cash book on the side shown.

Item	Cash book side	Reason
Bank charges	Credit	Money leaves the account
Bank interest paid (for example on borrowing)	Credit	Money leaves the account
Bank interest received	Debit	Money enters the account
Credit transfer received (a customer pays direct)	Debit	Money enters the account
Direct debit (a supplier collects an amount)	Credit	Money leaves the account
Standing order (the bank pays a fixed sum on set dates)	Credit	Money leaves the account
Correction of an error in the cash book	Debit if the cash book showed too little received or too much paid; credit in the opposite case	Make the cash book match what really happened

Each entry also needs its other half in the ledger (for example the insurance expense for a standing order, or the customer’s account for a credit transfer). That second entry is part of the same double entry, so do not leave it out when a question asks for ledger or journal entries.

Worked example: Larkhaven Garden Supplies, April 2027

The cash book bank column for April, before any updating (all amounts are in dollars):

Debit	Amount	Credit	Amount
1 Apr Balance b/d	3,420	3 Apr Rent (cheque 0418)	750
6 Apr Ormerod Ltd	1,380	9 Apr Teague Ltd (cheque 0419)	1,205
14 Apr Penhale Ltd	960	16 Apr Wages (cheque 0420)	880
30 Apr Sales banked	1,740	21 Apr Advertising (cheque 0421)	351
		28 Apr Supplier (cheque 0422)	520
		30 Apr Balance c/d	3,794
	7,500		7,500

The bank statement for April, from Larkhaven’s point of view:

Date	Details	Paid out	Paid in	Balance
1 Apr	Opening balance			3,420
3 Apr	Cheque 0418	750		2,670
6 Apr	Ormerod Ltd		1,380	4,050
10 Apr	Cheque 0419	1,205		2,845
12 Apr	Credit transfer, Calder Nurseries		640	3,485
14 Apr	Penhale Ltd		960	4,445
15 Apr	Standing order, insurance	95		4,350
18 Apr	Cheque 0420	880		3,470
22 Apr	Cheque 0421	315		3,155
24 Apr	Direct debit, electricity	164		2,991
26 Apr	Cheque 0431	85		2,906
30 Apr	Interest received		9	2,915
30 Apr	Bank charges	32		2,883

Step 1: tick off. Match every line in the cash book with the statement. Cheques 0418 to 0421, and the receipts from Ormerod Ltd and Penhale Ltd, appear in both. Cheque 0422 and the $1,740 deposit appear only in the cash book. The transfer, standing order, direct debit, interest and charges appear only on the statement. Cheque 0421 is $315 on the statement but 351 in the cash book. Cheque 0431 is not one Larkhaven issued: its cheques stop at 0422.

Step 2: update the cash book.

Debit	Amount	Credit	Amount
Balance b/d (from above)	3,794	Standing order, insurance	95
Credit transfer, Calder Nurseries	640	Direct debit, electricity	164
Interest received	9	Bank charges	32
Error: cheque 0421 (351 less 315)	36	Balance c/d	4,188
	4,479		4,479

The corrected balance is $4,188. Check: 3,794 + 640 + 9 + 36 − 95 − 164 − 32 = 4,188. Cheque 0422, the deposit and cheque 0431 stay out of the cash book.

Step 3: reconcile.

Bank reconciliation statement at 30 April 2027	Amount
Balance per updated cash book	4,188
Add: unpresented cheque 0422	520
	4,708
Less: uncredited deposit	1,740
Less: bank error (cheque 0431 debited to the account in error)	85
Balance per bank statement	2,883

The result equals the closing balance on the statement, so every difference is explained. If it did not, a difference would remain to hunt for. Larkhaven should now tell the bank about the $85.

Which way does each item go?

The statement above starts from the cash book and works towards the statement. In that direction, ask what the bank statement is missing or has got wrong:

• An unpresented cheque has not yet reduced the statement, so the statement is too high. Add it to reach the statement balance.
• An uncredited deposit has not yet increased the statement, so the statement is too low. Deduct it.
• A payment the bank took in error has made the statement too low. Deduct it.
• Money the bank added in error has made the statement too high. Add it.

If you work the other way, from the statement balance to the cash book, every sign reverses. Pick one direction and use it consistently. Label the first line and the last line clearly, so it is obvious which balance is which.

Overdrawn balances. The same method works if the business owes the bank. Treat an overdrawn cash book balance as a negative figure, then add and deduct exactly as before. Charges and interest paid on the overdraft are entered on the credit side and make the overdraft larger.

Digital business transactions

The syllabus asks about the impact of digital business transactions, such as card payments, online payments and bank transfers, on bank reconciliation. The effects to be able to explain:

• Many payments clear within hours, so fewer unpresented cheques and uncredited deposits build up and the two balances often start closer together.
• Bank feeds and online banking let a business reconcile daily or weekly rather than once a month, so errors and unauthorised payments are found sooner.
• Software can suggest matches between the bank feed and the records, which saves time on routine ticking off.
• Direct debits, standing orders, charges and interest still reach the bank first, so the cash book still needs updating.
• Mistakes such as a duplicated or wrongly keyed payment, or an automated match to the wrong item, still need a person to review them.

Common errors

• Entering unpresented cheques or uncredited deposits in the cash book. They are already there.
• Adding bank charges to the cash book debit side. They are an outflow, so they go on the credit side.
• Beginning the reconciliation with the old, un-updated cash book figure.
• Using the wrong sign for a bank error. Ask whether the statement is too high or too low.
• Treating a cash book error as a bank error. A cash book error is corrected in the cash book.
• Leaving the reconciliation without a heading, or without stating which balance is which.

Frequently asked questions

What is the purpose of a bank statement in Cambridge IGCSE Accounting 0452? A bank statement is the bank’s own record of money paid into and out of the account, so it gives an independent check on the cash book. It helps the business confirm entries, find items the bank has made, spot mistakes and detect unauthorised payments.

What is the difference between an unpresented cheque and an uncredited deposit? An unpresented cheque has been issued and entered in the cash book but not yet paid by the bank. An uncredited deposit, or outstanding lodgement, has been paid in and entered in the cash book but not yet shown on the bank statement.

Which items are entered in the cash book before a bank reconciliation? Items the bank has recorded that the business has not, such as credit transfers, standing orders, direct debits, interest and bank charges, are entered in the cash book first, along with any cash book errors. Unpresented cheques, uncredited deposits and bank errors stay out of the cash book.

How do digital payments affect bank reconciliation? Many payments clear within hours, so fewer unpresented cheques and uncredited deposits build up, and bank feeds let a business reconcile more often. Direct debits, charges and interest still need entering, and errors such as duplicated payments still need a person to review them.

How do you reconcile an overdrawn bank balance? Treat the overdrawn cash book balance as a negative figure and add and deduct exactly as for a positive balance. State clearly that the final balance is overdrawn.

Official syllabus

Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029 (version 1), published by Cambridge University Press & Assessment (Cambridge International Education). Section 3.3 Bank reconciliation.