Bank Reconciliation Statement Test

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Bank Reconciliation Statement Test - 15

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Question 1
1 / -0

Which of these errors or omission are part of Bank Reconciliation?

A
Wrong totaling of bank column of cash book.

B
Showing sale of asset as sale of trading goods.

C
Both A & B.

D
None of the above.

Solution

Sometimes the difference between the two balances may be accounted for by an error on the part of the bank or an error in the cash book of the business. This causes difference between the bank balance shown by the cash book and the balance shown by the bank statement. There are two types of differences by error:
(a) Errors committed in recording transactions by the firm: Omission or wrong recording of transactions relating to cheques issued, cheques deposited and wrong totaling etc. committed by the firm while recording entries in the cash book cause difference between cash book and pass book balance.
(b) Errors committed in recording transactions by the bank: Omission or wrong recording of transactions relating to cheques deposited and wrong totaling etc. committed by the bank while posting entries in the pass book also cause differences between pass book and cash book balance.
Therefore, of the given options above, only wrong totaling of bank column of cash book is considered as an error which will form a part of Bank Reconciliation Statement. Conceptual errors of treating sale of asset as sale of goods is not considered for reconciliation.
Question 2
1 / -0

__________ is the reason for bank pass book showing higher balance than Cash book.

A
Cheque issued but not paid

B
Cheque deposited but not cleared

C
Direct payment made by Bank

D
Interest charged by Bank

Solution

When a business compares the balance of its cash book with the balance shown by the bank passbook, there is often a difference, which is caused by the time gap in recording the transactions relating either to payments or receipts. Cheque issued by the bank but not yet presented for payment is one reason for bank pass book showing higher balance than cash book. When cheques are issued by the firm to suppliers or creditors of the firm, these are immediately entered on the credit side of the cash book. However, the receiving party may not present the cheque o the bank for payment immediately. The bank will debit the firm's account only when these cheques are actually paid by the bank. Hence, there is a time lag between the issue of a cheque and its presentation to the bank which may cause the difference between the two balances.
Question 3
1 / -0

Difference in balance as per pass book and balance as per cash book due to ________ is termed as difference arising due to errors in recording the transaction.

A
cheque issued but not presented for payment

B
dishonour of a discounted bill

C
direct payment by the bank/ customers

D
none of these

Solution

It is generally experienced that when a comparison is made between the bank balance as shown in the firm's cash book, the two balances do not tally. Hence, to first ascertain the causes of difference thereof and then reflect them in a statement called Bank Reconciliation Statement to reconcile (tally) the two balances. Reconciliation of the cash book and the bank passbook balances amounts to an explanation of differences between them. The differences between the cash book and bank passbook is caused by:
a. timing differences on recording of the transactions.
b. errors made by the business or by the bank.
Sometimes the difference between the two balances may be accounted for by an error on the part of the bank or an error in the cash book of the business. This causes the difference between the bank balance shown by the cash book and the balance shown by the bank statement. Difference in balance as per pass book and balance as per cash book due to errors committed in recording transaction by the firm and errors committed in recording transactions by the bank are termed as difference arising due to errors in recording the transaction
Question 4
1 / -0

Unfavourable balance as per bank pass book means ___________.

A
bank overdraft

B
debit balance in pass book

C
debit balance in cash book

D
both A and B

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 5
1 / -0

Credit entry in pass book at any point of time means ___________.

A
Amount withdrawn from customers a/c

B
Amount deposited in customer a/c

C
Both A and B

D
None of these

Solution

The pass book is just a copy of the account statement as maintained by the bank. So if the pass book reflects a credit entry it means that the amount is in the nature of a liability/payable for the bank and it would be the opposite for the account holder. For example when a debtor directly deposits in the account holder/customer account ,the account holder's passbook would show a credit entry.
Question 6
1 / -0

Entry in debit side of bank pass book implies ____________.

A
Cash withdrawn

B
Cash/ cheque deposited in Bank

C
Business Receipts

D
Personal Receipts

Solution

When cash is withdrawn from Bank the entry for the same is as follows :
Cash A/c. ........................... Dr.
To Bank A/c.
So the bank column of the cash book would be credited with the amount withdrawn, but as the pass book is an opposite record of the cash book, in the pass book the said entry for cash withdrawal would be debited.
Question 7
1 / -0

Debit entry in pass book at any point of time means _________.

A
Amount deposited by the customer

B
Amount withdrawn by the customer

C
Amount deposited in customers a/c

D
Amount withdrawn/ deducted from customers a/c

Solution

The pass book is just a copy of the account statement as maintained by the bank. So if the pass book reflects a debit entry it means that the amount is in the nature of a receivable/asset for the bank and it would be the opposite for the account holder. For example when monthly statement charges are charged by the bank to the account holder/customer account the account holder's passbook would show a debit entry.
Question 8
1 / -0

Which of these statements is true about a bank pass book?

A
Pass book contains a copy of bank column of the customer's cash book

B
Pass book is a copy of customer's account in bank's books

C
Pass book contains a copy of cash column of customer of cash book

D
Pass book contains a copy of Customers current account in cash book

Solution

The cash book also serves the purpose of both the cash account and the bank account and shows the balance of both at the end of the period. Once the cash book has been balanced, it is usual to check its details with the records of the firm's bank transactions as recorded by the bank. To enable this check, the cashier needs to ensure that the cash book is completely up to date and a recent bank statement (or a bank passbook) has been obtained from the bank. A bank statement or a bank passbook is a copy of a bank account as shown by the bank record. This enables the bank customers to check their funds in the bank regularly and update their own record of transactions that have occurred.
Question 9
1 / -0

Debit balance as per pass book means ____________.

A
Bank Overdraft

B
Debit Balance in Pass Book

C
Cash Balance with Bank

D
None of these

Solution

Bank statements usually show a debit balance which indicate a positive balance. Overdrafts are where the bank account becomes negative and the businesses in effect have borrowed from the bank. In the bank statement, where the balance is followed by Dr. (or sometimes OD) means that there is an overdraft and called debit balance as per passbook. An overdraft is treated as negative figure on a bank reconciliation statement.
Question 10
1 / -0

Credit balance in bank pass book means ________.

A
bank overdraft

B
bank Balance

C
balance as per Cash book

D
total of bank A/c

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.

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Bank Reconciliation Statement Test - 15

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Bank Reconciliation Statement Test - 15

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Question 1

Wrong totaling of bank column of cash book.

Showing sale of asset as sale of trading goods.

Both A & B.

None of the above.

Solution

Question 2

Cheque issued but not paid

Cheque deposited but not cleared

Direct payment made by Bank

Interest charged by Bank

Solution

Question 3

cheque issued but not presented for payment

dishonour of a discounted bill

direct payment by the bank/ customers

none of these

Solution

Question 4

bank overdraft

debit balance in pass book

debit balance in cash book

both A and B

Solution

Question 5

Amount withdrawn from customers a/c

Amount deposited in customer a/c

Both A and B

None of these

Solution

Question 6

Cash withdrawn

Cash/ cheque deposited in Bank

Business Receipts

Personal Receipts

Solution

Question 7

Amount deposited by the customer

Amount withdrawn by the customer

Amount deposited in customers a/c

Amount withdrawn/ deducted from customers a/c

Solution

Question 8

Pass book contains a copy of bank column of the customer's cash book

Pass book is a copy of customer's account in bank's books

Pass book contains a copy of cash column of customer of cash book

Pass book contains a copy of Customers current account in cash book

Solution

Question 9

Bank Overdraft

Debit Balance in Pass Book

Cash Balance with Bank

None of these

Solution

Question 10

bank overdraft

bank Balance

balance as per Cash book

total of bank A/c

Solution

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