▶ Why is my opening balance not the same as the bank statement as at 1st April?

Why is my opening balance not the same as the bank statement as at 1st April?

The opening balance on the 1st April should be your cashbook balance, and this may not always match the bank statement figure at the same date. This is often due to the presence of in-transit transactions, such as cheques that have been issued or received but not yet processed on the bank statement.

How is the cashbook balance calculated?

The opening balance on the 1st of April is the closing balance from the previous financial year as at 31st March. The closing cashbook balance is calculated as follows:

• Bank statement balance as at 31st March - unpresented payments + unpresented receipts = Cashbook balance as at 31st March.

This closing balance then becomes the opening balance as at the 1st April for the new year.

For example, your closing bank statement balance as at 31st March is £50,000. You have written a cheque within March for £5,000, but this has not yet been cashed by the supplier and does not show on your bank statement until April. The £5,000 cheque is recorded within the year it is made, but not reconciled, giving us an unpresented payment of £5,000:

• Bank statement balance as at 31st March (£50,000) - unpresented payments (£5,000) = Cashbook balance as at 31st March (£45,000).

In practice, it is unlikely that all cheques related to the previous year would be processed and appear on the bank statement before 31st March. If that does happen, the opening balance and the bank statement amount will be the same. However, in most cases, there will be a discrepancy due to in-transit transactions.