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Bank Reconciliation Statement Test 15

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Bank Reconciliation Statement Test 15
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  • Question 1
    1 / -0
    The proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an __________.
    Solution
    The credit note or note collected by the bank for the depositor implies that the balance in the passbook is being increased for reasons other than deposits. So, the proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an addition per book balance of cash.
  • Question 2
    1 / -0
    Bank reconciliation statement points out _______________.
    Solution
    A bank reconciliation statement is prepared using cash book which is prepared by the business and passbook which is prepared by the bank. When the balances of these two books are compared and reconciled, the credibility of the balances is established. Since the business prepares the cash book and the bank reconciliation statement and the passbook is prepared by the bank, the business is able to establish the credibility of the balance as per pass book which is not prepared by the business, on the basis of cash book while preparing bank reconciliation statement, which are prepared by it.
  • Question 3
    1 / -0
    The proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an _________.
    Solution
    In case when the bank collects a note for the depositor the entry for the same would have been entered in the bank statement and so the cash book balance would be less than the bank statement balance.
    Therefore, the proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an addition to the balance as per cash book.
  • Question 4
    1 / -0
    Bank reconciliation statement is the comparison of the bank statement with _______.
    Solution
    To reconcile means to find out the differences if any between two or more things and eliminate it. Now, in case of any banking transactions for each deposit or withdrawal the entry is recorded at two places.
    • The pass book maintained by the bank and
    • The cash book maintained by the account holder.
    These two books are opposites of each other which means if one shows credit balance then the other would reflect a debit balance of the exact same amount. But due to reasons like timing differences the balances of both these books do not match. 
    So, to reconcile the same a bank reconciliation statement is prepared. The aim while preparing a bank reconciliation statement is to take either pass book or cash book  balance as the starting point, to add or deduct certain entries and reach the balance of the other book ie, if cash book balance is the starting point then after reconciling we should reach at pass book balance.
  • Question 5
    1 / -0
    Which of the following is true about bank reconciliation statement - 
    Solution
    A bank reconciliation statement is prepared to reconcile the differences between the balance as per cash book (bank column) and balance as per pass book (bank statement by identifying the causes of differences between the two. So, in the case where the balance of cash book and pass book matches, it need not be prepared. Also, it is not required to be prepared by any act or the bank. It is prepared by the business (accountant) as per the time period it deems fit.
  • Question 6
    1 / -0
    The difference in the balance of both the cashbook and the passbook can be because of.
    Solution
    Errors can also be made by the bank and hence it is not necessary only the business preparing cash book shall make errors.
    The difference is important to be known between the cash book and pass book to know the errors and frauds during the period in both cash book and pass book.
    If something is omitted to be recorded in both the books, it may not be know since there would not be base to reconcile.
  • Question 7
    1 / -0
    Entry on the debit side of pass book implies.
    Solution
    'Withdrawal' is money withdrawn by the business from the bank account from the available balance.
    Debit side is 'Withdrawal' and credit side is 'Deposit' as per the bank statement/ bank pass book.
    A debit entry in bank pass book is a credit entry in the cash book of the business and vice versa.
  • Question 8
    1 / -0
    If a cheque written by a firm is not canceled by the bank and returned with the month's bank statement, the firm should.
    Solution
    If a cheque written by a firm is not cancelled by the bank and returned with the bank's monthly statement, the firm should consider the cheque as outstanding while preparing the bank reconciliation statement. This means that such cheques are issued but not presented for payment. So, they reduce the balance in the cash book when they are debited but do not affect the balance in the passbook as they are not cleared by the bank yet.
  • Question 9
    1 / -0
    The proper treatment on the bank reconciliation of a debit memorandum issued by the bank is to show it as a/an __________.
    Solution
    A debit memorandum is issued by a bank with respect to any charges payable to it by the account holder, the entry for the same would be already passed by the bank and so the bank statement balance would be less than the cash book balance.
    Therefore, the proper treatment on the bank reconciliation of a debit memorandum issued by the bank is to show it as a deduction from the book balance of cash.
  • Question 10
    1 / -0
    In case of an enterprise having an overdraft facility the bank reconciliation statement treats all the cheques deposited but not cleared in the cash book to be __________.
    Solution
    Overdraft facility means that the customer is allowed to withdraw money from his bank account even when the balance is zero. However, this does not affect the way in which the cheques deposited but not cleared are recorded in the cash book. Cheques deposited but not cleared are debited in the cash book (bank column). Thus, even in the case of an enterprise having overdraft facility, the bank reconciliation statement treats all the cheques deposited but not cleared as added.
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