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Bank Reconciliation Statement Test 6

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Bank Reconciliation Statement Test 6
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  • Question 1
    1 / -0
    Which of these will require adjustment of cash book balance?
    Solution
    Cheque issued but not presented for payment is not an error. It is a time difference. Similarly, Cheque deposited but not cleared is also a time difference and not an error. Thus, we do need to adjust the cash book balance. 
    Any error in the passbook is an error of bank and only the bank cab adjust it.
    However, overcasting of the bank column of Cashbook is an error of cashbook which requires adjustment in the cash book balance.
    Thus, the correct answer is A.
  • Question 2
    1 / -0
    Credit balance in bank pass book means ________.
    Solution
    The amount of balance shown in the passbook or the bank statement must tally with the balances shown in the cash book. But in practice, these are usually found to be different. Hence, we have to ascertain the causes for such difference. It will be observed that a bank statement/passbook shows all deposits in the credit column and withdrawals in the debit column. Thus, if deposits exceed withdrawals it shows a credit balance and if withdrawals exceed deposits it will show a debit balance (overdraft). The debit balance as per the cash book means the balance of deposits held at the bank. Such a balance will be a credit balance as per the passbook. Such a balance exists when the deposits made by the firm are more than its withdrawals. It indicates the favorable balance as per cash book or favorable balance as per the passbook. Hence, credit balance in the pass book means bank balance.
  • Question 3
    1 / -0
    An amount of $$Rs. 2,500$$ is debited twice in the bank column of cash book. When credit balance as per pass book is the starting point which one of these adjustments would be done at the time of reconciliation?
    Solution
    When an amount is debited twice in the bank column of the cash book the pass book balance would be showing a lower balance so, in order to reconcile we would have to add the amount to the pass book balance.
    Example:
    Credit Balance as per passbook ........................................................... $$Rs. 5000$$
    Add : Cheque received debited twice in cash book ........................$$Rs. 2500$$
    Debit balance as per bank column of cash book ..............................$$Rs. 7500$$
  • Question 4
    1 / -0
    Entry on credit side of bank pass book implies ___________.
    Solution
    Any entry on the credit side of the pass book implies that the asset of the account holder( the amount reflecting as his bank balance) has increased and the liability of the bank has increased simultaneously. Now, cash/cheque deposited in bank leads to increase in the bank balance of the account holder and hence would be shown on the credit side of the pass book.
  • Question 5
    1 / -0
    Bank reconciliation statement is prepared to _________.
    Solution
    A Bank Reconciliation Statement is a statement prepared to reconcile/tally the differences that appear between the bank statement or passbook and the firm's cashbook so that the cause of difference thereof is ascertained. Businesses need to prepare the bank reconciliation statement for the following reasons:
    1. To ascertain the balance reported by the company's cashbook is the correct amount.
    2. To rectify any errors present in the cashbook. If theses errors are carried forward, it results in an incorrect income statement as well as incorrect balance sheet.
    3. More control over the recordings in the cashbook. 
  • Question 6
    1 / -0
    Unfavourable balance as per bank pass book means ___________.
    Solution
    The standard balance of cashbook is Dr. balance and the standard balance of passbook is Cr. balance i.e., Dr. balance of cashbook and Cr. balanced of passbook is considered as favorable balance. In case if passbook shows unfavorable balance then it would amount to either bank overdraft or debit balance in passbook.
  • Question 7
    1 / -0
    Which of these statement is false?
    Solution
    A bank reconciliation statement  :
    • is a statement used to reconcile cash book balance and pass book balance.
    • is a memorandum statement to used only for the internal reporting of the account holder/company.
    • uses cash book and pass book for its preparation. 
  • Question 8
    1 / -0
    Bank column of cash book showed bank balance of $$Rs. 8750$$. While reconciling the bank balance it was noticed that bank column of cash book was undercast by $$Rs. 90$$, bank draft charges of $$Rs. 50$$ and Telephone charges of $$Rs. 550$$ paid by the bank directly as per standing instruction were not accounted for in the Cash book. Find the adjusted balance of cash as per cash book.
  • Question 9
    1 / -0
    A cheque of $$Rs. 5000$$ in favour of Mr. X was wrongly credited by the bank in Mrs. X a/c as $$Rs. 550$$. While reconciling the bank balance of Mr. X, bank balance as per cash book will be __________.
    Solution
    The cheque was wrongly credited in Mrs X a/c as Rs. 550. This implies that the amount of Rs. 5000 was not added to Mr X's Bank account. Thus, his account will show a short balance by Rs. 5000. However, while reconciling the bank balance of Mr X, we won't consider the wrong credit to Mrs X's a/c.
    Thus, the correct answer is short by Rs. 5000.
  • Question 10
    1 / -0
    A cheque of $$Rs. 5000$$ in favour of Mr. X was wrongly credited by the bank in Mrs. X a/c as $$Rs. 550$$. While reconciling the bank balance of Mr. X, bank balance as per bank pass book will be _________.
    Solution
    When a cheque in favour of a person is credited by bank it leads to the increase in the account holder's bank balance. Now, here a cheque in favour of Mr. X of $$Rs. 5000$$ was wrongly credited to Mrs. X a/c as $$Rs. 550$$. This would lead to the bank balance as per pass book of Mr. X to be short by $$Rs. 5000$$ and the bank balance as per pass book of Mrs. X to be more by $$Rs. 550$$ . 
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