BOOKS OF ORIGINAL ENTRY 109 



amount for which one may issue checks before entirely 

 exhausting the amount on deposit. However, it cannot 

 be stated positively that one has the right to withdraw 

 an amount equal to the balance of the check stubs. 



Errors are made sometimes which cause the check stubs 

 to show an untrue state of affairs. It is for this reason 

 that the balance shown by the check stubs should be veri- 

 fied occasionally with the balance shown by the books of 

 the bank. This verification consists of three main steps: 



1. The finding of the balance shown by the bank's books. 



2. The comparing of the bank's figure with the figure 

 shown by the check stubs. 



3. Accounting for the difference between the two figures 

 when a difference exists. 



The first of the steps mentioned above, the finding of 

 the balance as shown by the books of the bank, is usually 

 accomplished by getting the bank pass book balanced. This 

 procedure results in the bank's recording the balance in 

 the pass book, and returning all checks "cashed" up to the 

 day of balancing. 



The second step, comparing the bank pass book balance 

 with the check stub balance, involves a simple compari- 

 son of figures. If the two amounts agree the third step 

 in the verification of the check stub figure is unnecessary. 



The third step, accounting for the difference between 

 the pass book and the check stub figures, if one exists, 

 is the one called "Keconciling the checking account. " It 

 usually consists in preparing a bank reconciliation state- 

 ment in the form shown in Illustration 24. Such state- 

 ment is usually prepared on the back of the last check 

 stub used up to the time of reconciliation. 



This bank reconciliation statement is typical of the 

 average one prepared on the farm. It shows the element 

 or elements that cause the difference between the bank 

 pass book balance and the check stub balance. Such dif- 



