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Bank Reconciliation Statement Test - 12

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Bank Reconciliation Statement Test - 12
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  • Question 1
    1 / -0
    A Bank Reconciliation Statement is prepared by ______.
    Solution
    A bank reconciliation statement is a reconciliation statement between the balances of cash book (bank column) and pass book (bank statement). It is prepared by the business firm to identify and adjust the causes of differences between the two balances.
  • Question 2
    1 / -0
    If the cash book balance is taken as starting point,the items which make the cash book balance smaller than the pass book must be _____for the purpose of reconciliation.
    Solution
    If the cash book balance is taken as starting point, the items which make the cash book balance smaller than the pass book must be added for the purpose of reconciliation. This is because we are trying to arrive at the balance as per pass book by taking balance as per cash book as base. In this case, items which make cash book balance smaller than the pass book, increase the balance in pass book when compared with cash book. So we have to add it to the balance of cash book to achieve pass book balance while reconciling.
  • Question 3
    1 / -0
    If the overdraft as per the pass book is taken as the starting point, the cheques issued but not presented are to be______in the bank reconciliation statement.
    Solution
    Cheques issued but not presented are recorded in the cash book first. They are recorded by the bank in the pass book only when such cheques are cleared by the bank. Thus, when we take overdraft balance as per pass book as the starting point to prepare bank reconciliation statement, cheques issued but not presented should be added to arrive at the balance as per cash book and reconcile the two balances.
  • Question 4
    1 / -0
    Favorable balance as per Cash Book means _________________.
    Solution
    Favourable means positive. Favourable balance in the cash book means positive balance in the bank column of cash book which happens when there is debit balance.
  • Question 5
    1 / -0
    Passbook is a copy of __________ as it appears in the ledger of the bank.
    Solution
    Passbook is a copy of the account of the customer as it appears in the bank's book. In other words, passbook is a record of banking transaction of a customer with bank. Entries which are made by a customer in the bank column of his cashbook must be entered by the bank in the passbook. Hence, the balances as per bank column of the cashbook must agree with the balance as per passbook.
  • Question 6
    1 / -0
    When the cheques are not presented for payment. favourable balance as per the cash book is __________than that of the pass book. 
  • Question 7
    1 / -0
    When a banker collects the bills and credits the amount, passbook overdraft shows ______ balance than before.
    Solution
    Pass book overdraft can be simply stated as debit/negative balance in the pass book. Which means the account holder has overdrawn from his account . So when a banker collects bills and credits the amount what happens is that the amount of bill is being received into the account and as a result the liability of the account holder is being reduced. Therefore, after the credit of the bill into the account the pass book overdraft would get reduced and show a lower debit balance than before.
  • Question 8
    1 / -0
    Normally, the cash book shows a debit balance. Pass book shows_________balance.
    Solution
    Passbook is a copy of account of the account holder in the books of the bank.
    The favorable balance of cashbook is debit balance while the favorable balance of passbook is Credit balance. Credit balance as per passbook means amount lying deposited in bank which is payable by the bank to the customer. Since the amount is receivable by the account holder, it is an asset for the account holder which therefore shows a debit balance.
  • Question 9
    1 / -0
    If the pass book shows a favorable balance and if it is taken as the starting point for the purpose of bank reconciliation statement then cheques issued but not presented for payment should be ______to find out cash balance.
    Solution
    Cheques issued but not presented for payment are recorded in the cash book first. They are recorded by the bank in the pass book only when such cheques are cleared by the bank. Thus, when we start by taking favourable balance as per pass book as the starting point, cheques issued but not presented should be deducted in order to arrive at the balance as per cash book and reconcile the two balances.
  • Question 10
    1 / -0
    A bank reconciliation statement is prepared with the balance of __________.
    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.
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