Cash and Bank Account Reconstruction verifies cash position and identifies missing information when complete records are not available. Cash Book Reconstruction: Opening Cash + Cash Receipts - Cash Payments = Closing Cash. Use available information: Till count at year-end provides closing cash, Identify all known cash receipts (customer payments, loans, asset sales, etc.), Identify all known cash payments (supplier payments, expenses, loan repayments, etc.), Calculate missing figure. Bank Account Reconciliation: Closing Bank Balance per statement reconciled with closing cash book balance by accounting for: Cheques issued but not cleared (deducted from bank balance), Cheques received but not deposited (added to bank balance), Bank charges not yet recorded (deducted from cash book), Interest/credits by bank not yet recorded (added to cash book). Purpose: Verify cash position at year-end, Identify any cash discrepancies, Confirm bank balance for balance sheet, Reconcile accounting records with bank statement. Procedures: Obtain bank statement at year-end, Identify all outstanding cheques, Identify all deposits in transit, Identify any bank errors, Prepare Bank Reconciliation Statement. Problems in Incomplete Records: Cash book may not record all transactions; bank statement becomes source of truth, Discrepancies may reveal missing transactions or errors, Reconciliation helps identify missing information. Exam tip: Practice bank reconciliation from incomplete records; master the mechanics of identifying deposits in transit and outstanding cheques; use bank statement as verification of cash position; reconcile carefully.