Learning Objectives:

• Understand the principles and concepts of accounting for commercial banks.

• Distinguish bank accounting from general corporate accounting.

• Apply the uniform chart of accounts used in banking.

1.1 Principles of Bank Accounting

Bank accounting is a specialised field due to the unique nature of banking operations. The Ordu University programme identifies “characteristics of bank accounting” and the “accounting system in commercial banking enterprises” as core topics . Bank accounting must address the unique characteristics of banking, including the high volume of transactions, the centrality of financial instruments, and the regulatory requirements governing capital adequacy and risk management.

Key principles include:

• Accrual Accounting: Revenue and expenses are recognised when earned or incurred, regardless of when cash changes hands.

• Prudence: Assets and income are not overstated; liabilities and expenses are not understated.

• Substance Over Form: The economic reality of transactions is reported, not just their legal form.

• Going Concern: Banks are assumed to continue operating, which affects asset valuation and liability classification.

The Ankara Medipol University bank accounting course emphasises understanding “accounting documents, ledgers, and financial transactions, and performing accounting operations” . The course requires students to “prepare documents, ledgers, and financial statements,” “apply the uniform chart of accounts,” and “prepare balance sheet accounts and income and expense accounts” .

1.2 Bank Accounting vs. General Corporate Accounting

The Beirut Arab University course identifies as a core objective to “understand the main differences between accounting systems for commercial banks” . Key differences include:

1.3 The Uniform Chart of Accounts

Banks use a standardised chart of accounts to ensure consistency in financial reporting. The Ordu University programme identifies “types of accounts used in banks and chart of accounts” as a core topic . The Ankara Medipol University course requires students to “apply the uniform chart of accounts” . Major account categories include:

• Assets: Cash, due from banks, securities, loans, fixed assets

• Liabilities: Deposits, borrowings, provisions

• Equity: Share capital, reserves, retained earnings

• Income: Interest income, fee income, trading income

• Expenses: Interest expense, operating expenses, provisions