Bank Reconciliation Statement Test

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Bank Reconciliation Statement Test - 13

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Question 1
1 / -0

A bank reconciliation statement is prepared by_________.

A
Creditors

B
Bank

C
Account holder in a bank

D
Debtors
Solution
Whenever money is deposited in bank or withdrawn from bank it is recorded in two places.
The pass book maintained by the bank
The cash book (bank column ) 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. Now, it is not practical and feasible for the bank to reconcile the account balances of each and every account holder so, the account holder prepares a bank reconciliation statement for his account maintained in the bank.
Question 2
1 / -0

Favourable balance means .

A
Credit balance in the cash book

B
Credit balance in pass book

C
Debit balance in cash book

D
Both (B) and (C)

Solution

The cash book is a account statement as maintained by the account holder. So if the cash book reflects a debit balance it means that the account is in the nature of a debtor/receivable for the account holder and it would be the opposite for the bank.
The pass book is a copy of the account statement as maintained by the bank. So if the pass book reflects a credit balance it means that the account is in the nature of a creditor/payable for the bank and it would be the opposite for the account holder.
So from the account holder's point of view he would be having a positive/favourable balance in his account in both the above situations whereas for the bank it would be the opposite.
Question 3
1 / -0

Unfavourable bank balance means _______________.

A
Credit balance in pass book

B
Debit balance in cash book

C
Debit balance in pass book

D
None of these

Solution

Unfavorable or negative balance means credit balance in cash book. This means that we have taken a loan from the bank i.e. we owe money to the bank. In such a case, the bank expects money from us and we become an asset for the bank. Assets have debit balance. So, the bank shows debit balance in our pass book, which is a copy of customer's account in the books of bank. So, an unfavorable balance in cash book represents debit balance in pass book.
Question 4
1 / -0

A Bank Reconciliation Statement is mainly prepared to ___________.

A
Reconcile the cash balance of the cash book

B
Reconcile the difference between the bank balance shown by the cash book and bank pass book

C
Both (A) and (B)

D
None of the above
Solution
Whenever money is deposited in bank or withdrawn from bank it is recorded in two places.
The passbook maintained by the bank
The cash book (bank column ) 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. Now, it is not practical and feasible for the bank to reconcile the account balances of each and every account holder so, the account holder prepares a bank reconciliation statement for his account maintained in the bank.
Question 5
1 / -0

When the pass book balance is taken as the starting point, items which makes the pass book balance ____________ than the balance in the cash book must be deducted for the purpose of reconciliation.

A
lower

B
higher

C
equal

D
None of the above

Solution

Suppose the pass book balance is $$Rs. 50000$$ and the balance in the cash book is $$Rs. 48000$$ the only different entry being the bank interest of $$Rs. 2000$$ which is credited in the passbook. Now this entry was not included while preparing the cash book and so during reconciliation if pass book balance is the starting point then this amount of bank interest would have to be deducted so as to reach the cash book balance, because the pass book balance is higher in this case and it is due to the bank interest received.
Question 6
1 / -0

An extract of customer's account maintained by bank is __________.

A
Cash book

B
Pass book

C
Sales book

D
Purchase book

Solution

Pass book is an important extract of customer's account maintained by the bank which is Account number specific and includes all the transactions made during the period. Pass book shows the details of the transactions and the net balance as on date.
Question 7
1 / -0

Debit balance in bank passbook is called ____________.

A
Debit balance

B
Credit balance

C
Balanced

D
Overdraft

Solution

Bank overdraft is the amount withdrawn by business from bank in excess of deposits up to a prescribed limit. This facility is provided to the current account holders for which the bank charges a certain amount. Bank overdraft is also known as credit balance as per cash book and debit balance as per the pass book.
Question 8
1 / -0

Pass Book is ___________ of account holder's transaction with the Bank.

A
An extract

B
A Balance Sheet

C
A balance

D
A mode

Solution

Balance Sheet of a bank is a collation of any accounts maintained by the customers, hence pass book can never be a balance sheet neither can it be a balance. 'Mode' can be online banking or offline banking and has nothing to do with the pass book.
Pass book is only an extract of all the transactions undertaken by the customers during the period.
Question 9
1 / -0

A bank reconciliation statement is a statement prepared to reconcile ________.

A
Trial balance

B
Profit as per books of account with the profit as per Income-tax returns

C
Cash balance as per cash book with bank balance as per pass book

D
Bank balance as per cash book with bank balance as per bank pass book

Solution

It is generally experienced that when a comparison is made between the bank balance as shown in the firm's cash book and the bank balance shown in the bank book, the two balances do not tally. Hence, we have to ascertain the causes of differences thereof and then reflect them in a statement called Bank Reconciliation Statement to reconcile (tally) the two balances.
In order to prepare a bank reconciliation statement there is a need of bank balance as per the cash book and a bank statement as on particular day along with details of both the books. If the two balances differ, the entries in both the books are compared and the items on account of which the difference has arisen are ascertained with the respective amounts involved so that the bank reconciliation statement may be prepared.
Question 10
1 / -0

Overdraft means ___________ balance of Pass Book.

A
Debit

B
Credit

C
Closing

D
Opening

Solution

A pass book will usually have a credit balance showing the amount of positive closing balance in the account. When the closing balance of the account is negative, it is referred to as overdraft. It is a situation where debit transactions in the account are more than the available balance and hence the closing balance seen is the debit balance and not a credit balance.

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Re-Attempt Weekly Quiz Competition

Bank Reconciliation Statement Test - 13

Result

Bank Reconciliation Statement Test - 13

Score

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Rank

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SHARING IS CARING

Question 1

Creditors

Bank

Account holder in a bank

Debtors

Solution

Question 2

Credit balance in the cash book

Credit balance in pass book

Debit balance in cash book

Both (B) and (C)

Solution

Question 3

Credit balance in pass book

Debit balance in cash book

Debit balance in pass book

None of these

Solution

Question 4

Reconcile the cash balance of the cash book

Reconcile the difference between the bank balance shown by the cash book and bank pass book

Both (A) and (B)

None of the above

Solution

Question 5

lower

higher

equal

None of the above

Solution

Question 6

Cash book

Pass book

Sales book

Purchase book

Solution

Question 7

Debit balance

Credit balance

Balanced

Overdraft

Solution

Question 8

An extract

A Balance Sheet

A balance

A mode

Solution

Question 9

Trial balance

Profit as per books of account with the profit as per Income-tax returns

Cash balance as per cash book with bank balance as per pass book

Bank balance as per cash book with bank balance as per bank pass book

Solution

Question 10

Debit

Credit

Closing

Opening

Solution

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